Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Cauldron Energy To Raise $11M From Chinese Investors For Uranium Project

Cauldron Energy (ASX:CXU) has closed an $11 million round of funding from a number of Chinese investors following a roadshow in Beijing in late 2013.

Funds raised will be put to resource definition at the Yanrey Uranium Project in Western Australia.

In addition, exploration will commence at the Marree base metals project in South Australia and the interesting looking Argentinean uranium-copper-silver asset will gain exploration funding.

Cauldron's share price has been one of the best performers of late on the Australian Stock Exchange, rising from $0.087 to $0.225.

Under the placement to the investors, a total of 93,220,438 new fully paid ordinary shares will be issued in stages at an issue price $0.118 per share to raise $11 million.

Cauldron signed a mandate with a leading investment company in China, Shanghai Joseph Limitless Investment to raise funds for the company.

Of the placement funds, $9 million is attributable to funds raised under this mandate from new investor Guangzhou City Guangrong Investment Management Co., Ltd and funds directly from Beijing Joseph Investment Co. Ltd / Joseph Investment International and Joseph Investment's controlled entity Guangzhou Joseph Investment Co. Ltd.

The funds will be paid between the period of June 2014 to December 2015, subject to shareholder approval, with the majority being received in the current year.

"Cauldron has proven it has made a strong strategic alliance with Dr Joseph Chen, the chairman and founder of Joseph Investment," said executive chairman Tony Sage.

"Cauldron's non-executive director Mr Qiu Derong also continues to support the Company by committing $2 million further funding," Sage added.

The issue price is equal to 80% of the volume weighted average closing price of the shares of the company as quoted on ASX over the last 10 days immediately preceding 29 May 2014.

Placement terms

Amounts subscribed, and parties to the placement agreements are:

- A$5,000,000 from Guangrong Investment;
- A$2,000,000 from Joseph Investment;
- A$2,000,000 from Guangzhou Joseph; and
- A$2,000,000 from Mr Qiu Derong (non-executive director of Cauldron)

The placement Agreements also include the offer of unlisted options exercisable at:

- $0.118 per option if exercised on or before 31 December 2015; or
- $0.138 per option if exercised on or before 31 December 2016

The unlisted options are to be issued as follows:

- 17 million to Guangzhou Joseph (the placement to Guangzhou Joseph is conditional on Guangzhou being granted these options);
- 20 million to Joseph Investment (the placements to Guangrang Investment and Joseph Investment are conditional on Joseph Investment being granted these options); and
- 8 million to Mr Qiu Derong (the placement to Mr Qiu is conditional on Mr Qiu being granted these options).

The placement and issue of options are subject to shareholder approval. In July 2014, where shareholder approval will be sought.

Dr Amy Wang was appointed as a non-executive director. An additional Chinese director will be added to the board upon completion of the placement to Guangrong Investment.

Yanrey Uranium Project

Yanrey comprises 12 granted exploration licences (3,326km2) and six applications for exploration licences (386km2). Uaroo Joint Venture comprises 2 granted exploration licences (114km2).

Yanrey is prospective for large sedimentary hosted uranium deposits.

Recent work included:

- ANSTO and CoreLabs test work has now been completed
- Metallurgical studies on Bennet Well diamond core show potential for a significant increase to the uranium oxide grades
- This is likely to lead to a significant increase in the combined resource of 15.7 million pounds of uranium oxide
- The revised resource estimate for Bennet Well is underway and expected in the June quarter 2014

Significantly, initial metallurgical testing showed that uranium extractions for the moderate ISL conditions (CAULD1 and CAULD2) were high at 97.3% and 96.4% for the two composites.

Argentina assets

In Argentina, Cauldron controls, through its wholly-owned subsidiary and an agreement with Caudillo Resources S.A. more than 3,400 km2 of ground in six project areas in four provinces.


The placement demonstrates a strong endorsement of the quality of the Yanrey uranium project and the ability of Cauldron to fast track development of the potential ISR project at Bennet Well.

With uranium demand likely to power a higher price in 2015, the timing is good. In addition, the company's Argentina uranium prospect is also of interest given that economy's dependency on nuclear power.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.