Volt Resources Secures $500,000 for Loan Refinancing and US Operations
VRC (VRC) Share Update August 2024 Thursday 15th
Volt Resources Announces $500,000 Capital Raise to Boost US Operations
Volt Resources Limited (ASX: VRC) has announced a successful $500,000 capital raise aimed at refinancing a loan and driving its US downstream operations.
Instant Summary:
- Firm commitments received for $500,000 via Convertible Note.
- Funds to be used for loan refinancing, US downstream operations, and general corporate purposes.
- Significant reduction in cash outflows from $9.5 million in FY 2023 to $4.6 million in FY 2024.
- Board members and CEO to take fees in equity to align with shareholders.
- Convertible Notes have a 12% per annum coupon and are secured over the Bunyu Graphite project.
Capital Raise Details
Volt Resources Limited (ASX: VRC), a graphite producer and battery materials developer, has announced a successful capital raise of $500,000. The funds were secured through firm commitments from professional and sophisticated investors via Convertible Notes.
The raised capital will be allocated to refinance an existing loan, support US downstream operations, and cover general working capital and corporate expenses. This strategic move aims to strengthen Volt's financial position and operational capabilities.
Fiscal Discipline
In a bid to maintain fiscal discipline, Volt has significantly reduced its cash outflows. The net cash outflow during FY 2024 was $4.6 million, a substantial decrease from $9.5 million in FY 2023. The June quarter alone saw a further reduction in operating costs to $469,000.
To better align with shareholders, the company will implement a clear 60, 90, and 120-day plan to deliver concise messages and milestones. Additionally, Board members will take all Director Fees and Consultancy Fees in equity, while the CEO will receive 50% of his Monthly Fee in equity, subject to shareholder approval.
Convertible Note Details
The Convertible Notes issued as part of the capital raise have a face value of $1.00 each and come with a 12% per annum coupon, accrued daily. These notes are 100% secured over the company's Bunyu Graphite project, effective from 31 August 2024. The term of the notes is 12 months, with conversion into VRC shares at $0.005 per share at the election of the investor.
Melbourne-based boutique investment management firm, Peak Asset Management, acted as the Lead Manager for this capital raise.
This capital raise is expected to have a positive impact on Volt Resources by providing the necessary funds to refinance its loan and enhance its US downstream operations. The reduction in cash outflows and the alignment of Board and CEO compensation with shareholder interests are also positive signs. However, the issuance of Convertible Notes may lead to some dilution of existing shares, which could have a mixed impact on the stock price.
Investor Reaction:
Analysts are likely to view this capital raise positively, given the clear allocation of funds and the company's efforts to reduce cash outflows. The alignment of compensation with shareholder interests is also a strategic move that could boost investor confidence. However, the potential dilution from Convertible Notes may be a point of concern for some investors.
Conclusion:
Volt Resources' successful $500,000 capital raise marks a significant step in strengthening its financial position and operational capabilities. Investors should monitor the company's progress on its 60, 90, and 120-day plans and assess the long-term impacts of this capital raise on their portfolios. Volt's strategic response to these changes will be crucial in maintaining investor confidence.