In an unprecedented move, Sarama Resources Limited has announced an equity placement of up to AUD 2 million alongside the issue of equity for debt. Company experts believe that this dual strategy is vital to leveraging the assets of the organization as it transitions into a key production phase.
The placement will be made on a non-brokered private placement basis, offering up to 20 million units at a price of AUD 0.10 per unit. Notably each unit is comprised of one common share in the capital of the company, in addition to one common share purchase warrant. This generated fund will, in turn, allow for new shareholder investment, providing Sarama Resources with the opportunity to further their progression in the industry.
For each warrant, the holder will have the right to purchase one common share at a price of AUD 0.15 for a period of 24 months from the date of issuance of the warrant, subject to the laws of the governing jurisdiction. However, there are particular conditions under which the company can accelerate the expiration date of the warrants. Like when the closing price of the common shares listed on the Toronto Stock Exchange surpasses AUD 0.20 for a consequtive duration of 10 days.
Simultaneously, the company is also working towards an issue of equity for debt. Sarama Resources is expected to issue up to 6 million common shares at a deemed price of AUD 0.10 per share to certain creditors of the company. This novel strategy will enable the company to compensate for the required running costs, including but not limited to, supplier payments and service costs.
This dual-strategy — of the placement and the issue of equity for debt — provides a well-balanced, yet aggressive, approach toward business progress. At one hand, it allows for a fruitful influx of new investment, thereby creating an opportunity for further expansion. On the other hand, it ensures that the existing debts of the company are being handled, thereby strengthening the financial stability of Sarama Resources.
Furthermore, these approaches are directly coherent with the broader objectives of the company. With a focus on consolidating its holding in the southern Houndé Belt, which is among the most prospective exploration addresses in Burkina Faso. In addition, Sarama also has an interest in the Bondi deposit, which holds potential for near-term production. It is through the investing of the equity raised and the managing of existing debt, that these ambitious goals can become an achievable reality.
However, it’s important to note that this placement and issuance of equity for debt is subject to approval by the TSX Venture Exchange and will be subject to a statutory hold period of four months and one day from the date of completion.
In conclusion, through this savvy financial restructuring of equity placement and debt management, Sarama Resources seeks to pave the way to a successful and sustainable future. Optimizing its finances and streamlining its operations will undoubtedly fortify its position within the intensely competitive mining industry. The dual strategy is also expected to significantly elevate the overall corporate health and accelerate progress towards operational goals.