Pan Asia Metals (ASX: PAM) has unveiled a potentially transformative four-year $35 million equity facility with the New York-based private equity firm Global Emerging Markets (GEM). The funding secures the company’s future capital requirements under a flexible funding option to advance its flagship copper and lithium projects in Chile.
The company is also preparing to rebrand as Flagship Minerals, having noted the market’s confusion surrounding its geographic whereabouts.
It says the $35 million equity facility from the $3.4 billion investment group GEM will provide a pathway to resource definition and potentially pre-feasibility studies at its Rosario copper project in Chile and the extensive 1600 square kilometre Tama Atacama lithium project in the country’s renowned lithium brine region.
The capital agreement has been structured as a flexible equity investment, allowing Pan Asia to draw down funds by issuing shares to GEM whenever it deems appropriate and at whatever the 15-day share price average is at that time.
However, the company cannot draw down the entire $35m million out in one tranch. Management says over the next four years, the first three drawdowns will be capped at $1.5 million each, followed by three additional drawdowns of up to $5 million with the remaining $15.5 million subject to conditions, including that GEM not breach the 19.9 per cent ownership threshold governed by ASIC autocrats
Pan Asia will also pay a two per cent fee to GEM for the capital commitment, equating to a total of $700,000 within the next 12 months, payable as either cash or shares at Pan Asia’s election. The 2 per cent fee compares favourably to traditional broker-led raises that can attract fees up to 6 per cent plus.
We have been working on this Capital Commitment Agreement with GEM for several months and have found the GEM team constructive and collegiate. The facility provides PAM a pathway to resource definition and pre-feasibility at both the Rosario Copper and Tama Atacama Lithium projects, as well as working capital for the company’s other needs.
Pan Asia Metals Managing Director Paul Lock
Pan Asia only recently picked up its Rosario copper-silver project in the country’s Atacama region in October. Management says the project is significantly underexplored yet highly prospective for copper-silver mineralisation. It has the characteristics of “Manto-style” mineralisation - a potentially lucrative mineralisation type responsible for several 200 million tonne-plus discoveries grading more than one per cent copper throughout the northern parts of Chile, including the Mantos Blancos, El Solado and Michilla mines.
The project neighbours some world-class copper infrastructure too, including Codelco’s El Salvador mine and Enami’s copper processing plant, just 40 kilometres away.
The second project of interest to the New York-based investors is South America’s largest lithium brine project, the Tama Atacama project. It spans 1600 square kilometres in a hyper-arid, high-evaporation region. Situated close to Chile’s lithium refining hub in Antofagasta and supported by robust infrastructure, the company says the project is ideally positioned to capitalise on future predicted soaring global lithium demand.
Pan Asia says its dual focus on copper and lithium aligns with the global transition to cleaner energy and electrification. With copper deficits looming due to declining production grades and rising demand to fuel the electrification revolution, Pan Asia’s substantial funding package and rebranding comes as a serious statement from the company as it pushes ahead into its latest Chilean focused chapter.
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