Argonaut Resources' strongly supported $3.9 million capital raising boosted by copper outlook

Argonaut Resources NL (ASX:ARE) has completed a strongly supported share placement of around 491.6 million fully paid ordinary shares to professional sophisticated and institutional investors, raising $2.7 million and exceeding the target. Additionally, the company’s existing, eligible shareholders will have the opportunity to participate in a share purchase plan (SPP) at the same price per share of $0.0055 to raise $1.2 million. Argonaut believes that a rising copper outlook and growing Chinese demand along with the company's focus on the key metal in Australian and Zambia prompted the strong support.  The $3.9 million capital raising will support the company’s drilling program at the Murdie Copper Project in South Australia and metallurgical test-work at Lumwana West in Zambia. “Strong support” Argonaut director and CEO Lindsay Owler said: “The Argonaut board appreciate the support by the strong demand shown by the market for placement stock and it is encouraged by the market’s enthusiasm for the company’s planned drilling at the Murdie Copper Project in South Australia. “This placement and SPP come as we see the copper price strengthen on the back of strong Chinese demand and weaker South American supply.” Placement details The placement of ordinary shares will be issued using Argonaut's 15% placement capacity pursuant to ASX Listing Rules 7.1 and further 10% placement capacity pursuant to ASX Listing Rule 7.1A, as approved by Argonaut’s shareholders at the company’s general meeting on November 20, 2019. A total of 295.0 million new shares will be issued under the LR7.1 placement capacity and the remaining 196.6 million new shares will be issued under the LR7.1A placement capacity. New shares will be issued at a fixed price of 0.55 cents, representing a discount of around 21% to the latest trading price of 0.7 cents on September 18, 2020, 17% to the 5-day volume weighted average price (VWAP) of 0.67 cents; and 24% to the 15-day VWAP of 0.73 cents. The indicative timetable for the placement. Share purchase plan The company intends to raise around $1.2 million under the SPP which will not be underwritten. Argonaut reserves the right to accept oversubscriptions or to close the SPP early and scale back applications in its discretion. When determining the amount (if any) by which to scale back an application, the company will take into account a number of factors, including the size of an applicant’s shareholding, the extent to which eligible shareholders have sold or bought additional shares after the record date and the date an application was made. The SPP will open on September 25, 2020, and is scheduled to close on October 16, 2020. Drilling at the Murdie Project Owler said: “The funds raised by the placement and the share purchase plan will allow Argonaut to execute planned drilling at its 100%-held Murdie Copper Project. “The Murdie project is located nearby to BHP’s spectacular Oak Dam discovery and Oz Mineral’s newly commissioned Carrapateena copper mine. “Argonaut plans to drill five deep holes testing large, prospective geophysical targets in the style of Oak Dam and Carrapateena.“ The key dates for the SPP. Metallurgical testing at Lumwana West The company will also use the funds to restart scoping metallurgical test-work on its 90% held Nyungu copper-cobalt deposit at Lumwana West in north-western Zambia. Owler said: “Flotation test-work completed earlier in the year produced saleable copper concentrate grading 25.6% copper at 87% recovery in the laboratory. “Work planned for 2020 includes leach test-work, oxidation test-work and solvent extraction/electro-winning tests. “The Argonaut board looks forward to delivering exploration and feasibility results that will drive the company’s share price during this exciting commodities upswing.”