Mali Lithium to raise $70m

Subiaco-based Mali Lithium has announced a major capital raising that exceeds its prevailing market value, with the proceeds to fund the acquisition of the Morila goldmine in Africa.

Euroz Securities will be the sole lead manager for the $70 million placement, which has been priced aggressively at 16 cents per share.

Mali’s share price spiked to 20 cents per share last week after the Morila acquisition was announced but otherwise has rarely traded at or above 16 cents.

The share price dropped 12.8 per cent to 17 cents this morning.

At that price, the company had a market value of $53.9 million, based on the number of shares previously on issue.

Mali said gold producer Resolute Mining, which has been operating in Mali for more than a decade, would become a strategic shareholder but offered no details.

“The opportunity to develop a strategic partnership with Resolute in Mali will be investigated in the coming months,” executive chairman Alistair Cowden said.

Mali said it has completed the first tranche of the placement, raising $7.6 million, with the balance subject to approval by shareholders.

The company has allocated up to $37.8 million to buy 80 per cent of the Morila mine.

The remaining funds from the placement will be used to develop a new mine plan and upgrade infrastructure, and for drilling at its other gold projects in Mali.

It will also use $1.2 million of shares to cover a debt to contractor Capital Drilling.

Barrick Gold and AngloGold Ashanti both hold a 40 per cent stake in Morila, while the Malian government will retain a 20 per cent holding.

Morila has been a major gold producer but the current owners had been planning to close the mine after completing tailings processing in mid-2021.

Mali Lithium forecasts the mine will produce 26,350 ounces of gold between November this year and May 2021, generating around $US17 million ($A24 million) in cash flow.

The company said it anticipated a near-term increase in production from satellite pits.

It also anticipated a long mine life from the inferred 1.3 million ounce resource in the main pit.

Mr Cowden said the transaction was a watershed moment for the business.