ABx Group (ASX: ABX) has announced a $1.8 million capital raise via convertible notes to drive progress in two of its flagship projects: the Deep Leads Rare Earths project in Tasmania and the ALCORE fluorine recycling initiative. The funding highlights ABx’s strategic focus on delivering materials for a cleaner future, with critical minerals and sustainability at the forefront.
Convertible Note Placement Details
The $1.8 million capital raising is structured through a convertible note placement, designed to attract sophisticated and professional investors while balancing equity dilution. The issuance will occur in two distinct tranches:
- Tranche 1: A relatively modest initial raise of $370,000 under ABx’s existing placement capacity. This tranche allows the company to expedite early-stage activities without delay.
- Tranche 2: A significantly larger tranche of $1.43 million, contingent upon shareholder approval at an extraordinary general meeting (EGM) set for February 2025. This tranche is critical for securing the bulk of the required funding.
The convertible notes carry a coupon rate of 12% per annum, which will be settled in ABx shares issued at a 10% discount to the five-day volume-weighted average price (VWAP). This mechanism ensures a competitive yield for investors while providing ABx with flexibility in managing cash flow.
In a strategic move to further incentivise participation, each note will entitle the holder to 12 attaching unlisted options. These options are exercisable at $0.08 each and have a maturity date of 36 months from issuance, providing long-term upside potential linked to ABx’s share performance.
The structure of the notes demonstrates ABx’s careful balancing of immediate funding needs with investor confidence. With the Directors participating to the tune of $230,000, this signals strong internal belief in the projects and alignment with shareholder interests.
Funding Allocation
The funds raised through this convertible note placement are earmarked for advancing two cornerstone projects that reflect ABx’s dual focus on critical minerals and sustainability:
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Deep Leads Rare Earths Project
Located in northern Tasmania, the Deep Leads project focuses on ionic adsorption clay deposits, prized for their high-grade concentrations of dysprosium and terbium. These rare earth elements are crucial for permanent magnets used in electric vehicles, wind turbines, and other renewable energy technologies. Ionic clays, typically associated with lower production costs and less environmental disruption, position ABx to compete favourably in a market projected for substantial growth.
Exploration activity at Deep Leads Rare Earths Project
ABx plans to use the new funding to enhance exploration and feasibility work, focusing on defining the resource further and preparing for eventual commercial production. The project’s proximity to key infrastructure such as ports and its setting in a mining-friendly jurisdiction make it highly strategic.
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ALCORE Fluorine Recycling Pilot Plant
The ALCORE project represents a paradigm shift in recycling industrial waste, using proprietary technology to convert aluminium smelting by-products into valuable industrial chemicals. This includes hydrogen fluoride, which will eventually be processed into aluminium fluoride – an essential material for aluminium smelting that is currently 100% imported into Australia.The funds will be instrumental in constructing a continuous pilot plant in Tasmania, supported by a $1 million zero-interest conditional loan from the Tasmanian Government. This facility is not just a technological milestone but also a showcase of circular economy principles, reducing waste and creating value-added products.
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Working Capital and Placement Costs
A portion of the funds will cover operational overheads and expenses associated with the capital raise. This ensures ABx remains well-capitalised to sustain its broader portfolio of projects.
Joycelyn Morton, Non-Executive Chair, encapsulated the strategic significance:
"This capital raising enables us to deliver on our strategic priorities. Deep Leads and ALCORE are key projects that underscore our commitment to sustainability and innovation."
Recent Progress and Government Support
The ALCORE initiative recently gained momentum with a $1 million conditional loan from the Tasmanian Government to establish a pilot plant. The facility aims to demonstrate ALCORE’s proprietary process for converting aluminium smelting waste into valuable chemicals like hydrogen fluoride and aluminium fluoride. This process is a prime example of a circular economy, repurposing industrial waste to reduce reliance on imports.
Mark Cooksey, Managing Director and CEO of ABx Group, highlighted the significance of this support:
"Securing Tasmanian Government backing validates our technology and sets the stage for ALCORE to transition to commercial-scale operations.”
Strategic Importance of Rare Earths
ABx’s Deep Leads project in northern Tasmania is a standout in the critical minerals sector, targeting rare earth elements (REEs) essential for electric vehicles, wind turbines, and other green technologies. The project features ionic adsorption clays, known for their low-cost extraction compared to conventional deposits, and is situated in a favourable jurisdiction close to port infrastructure.
The global market for REEs is poised for significant growth, driven by the clean energy transition. ABx’s strategic positioning in the supply chain enhances its appeal to international markets increasingly focused on supply security.
A Cleaner Future
ABx continues to align its business model with global sustainability goals, leveraging innovative technologies to address critical resource challenges. From fluorine recycling to rare earth extraction, the company is cementing its role in Australia’s push to lead in clean materials.
As the convertible note placement progresses and major projects gather steam, ABx is poised to deliver substantial value for shareholders while addressing critical sustainability challenges. With its focus on rare earths and fluorine recycling, the company is well-positioned to play a key role in a greener global economy.
