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Latin sidesteps cap raise with innovative $2.75m loan agreement

Latin Resources has duck shoved its next capital raise with an innovative $2.75m loan from prolific small cap fund manager Lind Partners out of New York. Latin will guarantee repayment of the loan over the next 10 months out of funds raised from its existing options that are already well in the money with a 1.2c December 22 strike.

Lind will pick up $325k in fees and 35m out of the money options with a March 26 strike price of 5c each and Latin will avoid the need for a dilutive capital raise as it seeks to take its exciting Brazilian lithium project to the next stage.

Under the terms of the agreement, $2.5m, less a $75k “commitment fee” will be advanced to Latin, who will ultimately pay back $2.75m over the ten month period as options are converted by existing option holders.

Latin has approximately 429 million 1.2c options out there and could even raise as much as $5m if it gets a good conversion rate. The company says it expects a large portion to be exercised by the end of the year.

According to Latin, the initial investment will provide capital for additional drilling at its Salinas Lithium project in Brazil, where a recent drilling campaign uncovered numerous spodumene pegmatites. The Company is aiming to boost the existing 2,000-metre drilling program to 5,000 metres in order to push the project towards the estimation of a JORC mineral resource.

Latin will also use the funds to look further afield and begin finding drill targets on its additional lithium tenements in Brazil’s Salinas and Bananal Valley regions. Latin says, it will begin applying for permits after its additional drill targets have been defined and will seek to probe these once complete.

This innovative funding facility provided by our funding partner, Lind, provides the Company necessary working capital to continue to drill the newly discovered spodumene pegmatites in our Brazilian portfolio without the need for an equity placement, reducing dilution for existing shareholders. We expected we can add a lot of value, very quickly in Brazil with these funds.

The Company has good reason to expect over $5m cash will be received from the exercise of its LRSOC options, and this funding, backed by the option money, now fast tracks our drilling program. This funding provides a cost-effective source of capital for the Company.

The renowned Bananal Valley in south-west Brazil is an important part of Latin’s Salinas lithium project. The project is located in the famous Minas Gerais area, which also contains Sigma Lithium’s Grota do Cirilio project.

Sigma’s ground lies some 60 kilometres away and boasts a high-grade lithium resource of around 52 million tonnes. The company is nearing production at Grota do Cirilio and expects to deliver a product with an average grade of about 1.48 percent lithium oxide.

Lithium is red hot right now and Latin was probably ahead of its time a bit having secured lithium ground when the lithium price was floundering – it has no such problem now however and with a reinvigorated cashed up war chest and some really interesting ground it will be interesting to see just what stage Latin can get its Brazilian project to before needing money again.

The company’s agreement with Lind however appears to have allowed it to sidestep any dilution for now at current lowish prices – and Lind has deep pockets and plenty of appetite for high risk high reward ventures too which just might make it a perfect partner for Latin as it seeks its lithium fortune in Brazil.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au

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