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Latin Resources secures $35m backing for Brazilian lithium play

Updated: Apr 23

Latin Resources has raised $35 million from a recent capital raising. Credit: File

ASX-listed Latin Resources has received a firm commitment from a cluster of institutional and sophisticated investors to raise $35 million to expand the drilling program at its Salinas lithium project in Brazil throughout 2024.

The company says the funds will be used to accelerate its exploration at Salinas, in addition to funding geotechnical and hydrogeology testwork to support a definitive feasibility study slated to begin in the first half of next year.

Some 140 million new shares will be issued in a single tranche under the placement at a price of 25 cents per share, which represents an 11.7 per cent discount on the five-day weighted average price of 28.3 cents. The raised funds will boost Latin’s bulging bank balance to a whopping $65 million and the company says the funds may also be used to acquire additional tenements and provide ongoing working capital.

Canaccord Genuity (Australia) acted as lead manager and bookrunner to the placement, while PAC Partners were co-managers.

We are delighted to announce the completion of the Placement which provides the Company with significant headroom to accelerate its drilling efforts into 2024, with 10 rigs mobilized currently. The new funds will enable the Company to grow its Salinas resource to become a Tier one lithium global project. Latin Resources managing director Chris Gale

The company’s drilling onslaught shows no signs of slowing down with the fleet of 10 rigs working overtime at a trio of targets at Salinas in Brazil’s “Lithium Valley”, which also houses Sigma Lithium Resources’ 87 million tonne Grota do Cirilo project.

In June this year, Latin revealed a massive 241 per cent increase to the Colina mineral resource, based on 135 diamond drillholes for 39,033m of drill core, to 45.2 million tonnes at 1.34 per cent lithium oxide, representing a lithium carbonate equivalent of 1.477 million tonnes. The classification includes 0.43 million tonnes at 1.34 per cent lithium oxide in the measured category, 29.7 million tonnes at 1.37 per cent in the indicated category and 15 million tonnes at 1.22 per cent in the inferred category.

Recent drilling at the Colina and Colina South West deposits continues to expand the lithium footprint where, according to management, consistently high-grade mineralisation intersected in infill and extensional drilling has boosted its confidence in its ability to build on the already sizable resource by year’s end.

Colina SW is a mere 560m south-west of Latin’s Colina deposit, where management says ongoing drilling has delivered thick, high-grade intercepts, confirming its geological interpretation that the nearby Colina deposit is open along strike to the south-west.

In a wider search of its 38,000-hectare, 100 per cent-owned Salinas lithium project, Latin appears to have latched onto another intriguing pegmatite swarm at its Fog’s Block target, 12km south-west of Colina. Latest drilling results have returned 8.5m averaging 1.33 per cent lithium oxide, 8m at 1.08 per cent lithium oxide and a 5.5m run at 0.95 per cent lithium oxide from what appears to be an emerging project-scale lithium corridor.

Late last month, the company put the finishing touches to a preliminary economic assessment (PEA) that outlined an after-tax average annual free cash flow of US$383 million (AU$601 million) in a mine life of 11 years.

The PEA – which is similar in nature to an Australian JORC scoping study – forecast an after-tax net present value of US$2.5 billion (AU$3.6 billion), with an extraordinary internal rate of return of 132 per cent, in addition to a remarkable after-tax project payback period of about seven months.

Raising equity in a market that is being battered by soaring inflation, rising interest rates and the evolving conflict in the Middle East, is becoming something of an art form. So, to pull in $35 million in a single payment displays a mastery of Latin’s making

But laying claim to an evolving tier-one deposit in Brazil’s world-renowned Lithium Valley undoubtedly helps.

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