Peak Resources (ASX:PEK) - Managing Director, Bardin Davis
Managing Director, Bardin Davis
Source: Bardin Davis/LinkedIn
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  • Peak Resources (PEK) plans to raise up to $34 million through a two-tranche placement and share purchase plan
  • Around 333.2 million shares will be issued over two tranches at 9 cents per share, however the second tranche is subject to shareholder approval
  • Peak is using the money to develop its Ngualla Project and repay US$10 million (A$13.5 million) to end a royalty facility under a 2015 deal
  • PEK will raise the extra $4 million through a share purchase plan, allowing eligible shareholders to subscribe for up to new shares worth $30,000
  • Company shares are down 16.4 per cent to trade at 9.2 cents at 1:20 pm AEST

Peak Resources (PEK) has received commitments to raise $30 million through a placement to institutional, sophisticated and professional investors.

The placement will be completed over two tranches with the first to issue 226.8 million shares at 9 cents each to raise $20.4 million.

This issue price marks an 18.2 per cent discount to the last closing price of 11 cents and a 23.5 per cent discount to the five-day volume-weighted average price.

The second tranche will issue a further 106.4 million shares at the same issue price as tranche one to raise another $9.6 million. Tranche two is subject to shareholder approval which will be sought at a meeting to be held in late September.

Peak will use the money to develop its Ngualla Rare Earths Project and the Teesside refinery, as well as expand its technical and marketing team.

The miner was recently granted a special mining licence (SML) for the Ngualla Project to Peak’s 100 per cent owned Tanzanian subsidiary.

Additionally, the money will be used to repay an ANRF royalty facility which relates to a royalty agreement entered into in 2015.

Argonaut Natural Resources Fund (ANRF) granted Peak a financing package to complete a bankable feasibility study for the project. In exchange, it would receive a 2 per cent gross revenue royalty over the life of the Ngualla Project.

Peak will now repay around US$10 million (A$13.5 million) to terminate the revenue royalty and release related security arrangements.

This termination allows Peak to transfer the Ngualla SML into a new Tanzanian company that it will jointly own with the Tanzanian Government whereby PEK will own 84 per cent and the government will own the remaining 16 per cent.

Peak Managing Director Bardin Davis commented on the ANRF royalty facility.

“The termination of the life-of-mine royalty further de-risks the financing of the Ngualla Project and provides shareholders with increased exposure to earnings from the project and the potential upside in rare earth prices.”

In addition to the placement, Peak plans to raise an extra $4 million through a share purchase plan (SPP). Eligible shareholders may subscribe for up to $30,000 worth of new shares at the same price as the placement.

Company shares were down 16.4 per cent to trade at 9.2 cents at 1:20 pm AEST.

PEK by the numbers
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