This consists of a placement of 40,333,333 shares priced at $0.03 to raise $1.2 million and a partially underwritten one for five entitlement offer of 64,039,713 shares to raise up to $1.92 million.
Proceeds will also be used to meet the holding cost of the project, which has an Ore Reserve of 205 million tonnes at 45.7% iron enough to support a minimum 21 year mine plan under its Pre-Feasibility Study, as well as general working capital purposes.
The PFS had established Agbaja as an economically robust and technically viable project with average operating costs of US$42.98 per tonne concentrate FOB, estimated pre-tax NPV of US$420 million (at a 12% discount), an IRR of 23.7% and CAPEX estimate of US$497 million.
Lanstead Capital Equity Swap Agreement
The bulk of the placement was to Lanstead Capital, which has subscribed for 33,333,333 new shares along with 33,333,333 options that will be made in 18 monthly settlement tranches under an Equity Swap Agreement.
The options are priced at $0.08 and expired on 31 May 2017.
This agreement allows for Kogi to receive more than the monthly settlement due if the measured share price for that month is above the benchmark price of $0.04 per shares.
There is no upper limit placed on the additional proceeds received as part of the monthly settlements.
In contrast, it will receive a smaller settlement on a pro rata basis if the share price is below the benchmark.
Notably, a decline in the company's share price will not result in any increase in the number of ordinary shares received by Lanstead.
Kogi will issue Lanstead an additional 1,666,667 shares as consideration for the agreement.
Of the subscription proceeds of $1,000,00, the company will use $150,000 for working capital and $850,000 for investment in the Equity Swap under the Agreement as described above.
A decline in the company's share price will not result in any increase in the number of ordinary shares received by Lanstead or any other advantage accruing to Lanstead.
Kogi will also issue 1,666,667 shares to Lanstead in consideration for the Equity Swap Agreement.
This is designed to provide the company with flexibility in continuing to advance its Agbaja Project as well as maintaining a constant source of funds covering a substantial part of its longer term cash flow requirements.
The remaining 5,333,333 shares and 5,333,333 options to raise $160,000 under the placement will be placed with a variety of professional and sophisticated investors who are all currently shareholders.
The non-renounceable Entitlement Offer of 64,039,713 shares priced at $0.03 each to raise up to $1,921,191 before expenses is partially underwritten to $655,726 by Terrain Capital Markets.
All of the non-executive directors of Kogi intend to take up 100% of their individual entitlements under the offer totalling $274,274.
The directors have also agreed to sub-underwrite the issue for $320,726 taking total non-executive director participation in the Entitlement Offer to a maximum of $595,000 of which $300,000 will be set-off against loans owing by Kogi to several non-executive directors.
Kogi is in the process of relocating to smaller office premises and reviewing its Agbaja Project holding costs in line with its near term focus of eliminating non-essential costs.
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