Estrella Resources has pulled in a hefty $5 million from a strategic investor who exercised a second option to buy 136.76 million shares at 3.65 cents per share and at a 500 per cent premium to the first conversion in September. The cash boost will be used to fund drilling exploration on the company’s manganese and limestone prospects in Timor-Leste, where Estrella recently made some exciting discoveries.
ASX-listed Estrella Resources has pulled in a hefty $5 million from a strategic Western Australian investor, who is keen to back the company’s ambitious manganese and limestone exploration campaigns in Timor-Leste.
The cash came after MJ Ratta Investments exercised the second tranche of an option subscription agreement, inked in September last year.
Subject to shareholder approval, the investor will receive 136.76 million shares at 3.656 cents per share, which is a 20 per cent discount to Estrella’s 10-day volume-weighted average price of 4.57c.
The first tranche raised $350,000 from the issue of 53.3 million shares at 0.006c per share.
Estrella says the move is a major endorsement of the company’s fast-moving strategy in a region that, until now, has never seen modern drilling for metallic minerals.
The new funding package boosts Estrella’s balance sheet and also comes with attractive terms for Ratta. The investor will gain an increased gross revenue royalty from manganese production – up from 0.25 per cent to 0.5 per cent - and an extended royalty life from five to seven years if production gets up.
Additionally, the company has pledged a first-ranking security interest on its Spargoville nickel mineral rights until it can confirm delivery of 20,000 tonnes of ore to port.
Estrella Resources managing director Chris Daws said: “The exercise of the option to subscribe for $5 million worth of shares represents substantial validation of our rapid, first-mover strategy in the virtually unexplored region of Timor-Leste. The strategic investment has successfully raised capital at a premium to the initial tranche, which at the time proved vital to our emerging exploration in Timor-Leste.”
With the blessing of local Timor-Leste communities and its nascent mining industry, Daws added that Estrella has also received staunch support from its institutional shareholders.
The funds will be used to ramp up Estrella’s ongoing 3000-metre diamond and 10,000m reverse circulation drilling blitz and pave the way for a follow-up 10,000m reverse circulation campaign, subject to results.
The timing of the new cash has come at an exciting time for the company, which recently landed some big manganese results.
Last week, the drill bit struck a standout 7.76m hit of manganese oxide from just 30 centimetres below surface at its Ira Miri project in the country’s northwest.
The discovery came from a diamond drill hole using an upgraded rig, which twinned the project’s first hole that had earlier pulled up short in mineralisation. Fitted with an appropriate drill bit and improved drilling fluids, the rig is capable of churning through the harder material, leading to an improved core recovery.
Core visuals revealed thick, high-grade manganese zones, with some sections potentially hitting 100 per cent manganese oxide. Notably, the intercepts are already rivalling Australia’s renowned Groote Eylandt deposit, which averages just 3m wide.
Estrella says the material appears to be in-situ supergene enrichment from the Noni Formation and looks extremely well preserved beneath ancient overburden.
Drilling is continuing with step-out holes to test scale and continuity at Ira Miri, while the company pushes on with its permitting efforts to ramp up exploration at its Werumata and Lautém sites, further south.
In parallel with the hunt for manganese, the company is also chasing a large limestone opportunity as part of a partnership and an offtake agreement already in place to monetise the resource.
Last month, Estrella struck a binding deal with Indonesian group PT Raka Energi Mandiri (REM) to potentially export up to 500 million tonnes of high-grade limestone from Timor-Leste across the next five years.
The agreement gives REM exclusive marketing and off-take rights and includes a performance incentive of up to 500 million share options at 5c each.
The joint venture, dubbed Estrella Murak Rai Timor Lda, will retain all revenue from limestone sales. Estrella owns 70 per cent of the joint venture with Timor-Leste’s state-owned Murak Rai Timor holding the balance.
The material shows up as a clean, coral-rich layer running along the top of the dominant Baucau Formation, which stretches across the company’s 195 square kilometre concession. The resource also conveniently sits above its main manganese targets, allowing for dual-resource exploration in a single drill run.
Recent assays confirmed the limestone is a premium-grade calcite with minimal impurities, making it highly sought-after for use in cement, glass and agriculture. It is also the perfect neutralising agent in nickel processing and for environmental remediation.
With strong backing from the investor, local communities and a budding Timor-Leste mining industry, Estrella appears well-positioned to continue blazing a trail through uncharted territory.
The company has already marked itself as a pioneer in the region and now, with $5 million in the bank, it appears ready to dig even deeper.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
