Ann: Trading Halt, page-15

I am wondering if the following commentary by Klaus Eckhof re the recent AVZ Capital Raising has some rhyme and reason behind why MOD have pulled the trigger for more cash ??


AVZ Minerals boss Klaus Eckhof has revealed to * his reasons for going to the market for more money and why he chose a North American investor.
The lithium explorer (ASX:AVZ) revealed on Monday it is raising $15 million to fund its aggressive exploration push at its promising Manono lithium project in the Democratic Republic of Congo.
But investors showed their disapproval by forcing down the share price by as much as 13.3 per cent to 26c. AVZ shares ended Monday down 10 per cent at 27c and closed Tuesday at 25c.
“We are basically down to $10 million and that will last us probably another four months and we can’t run down to zero,” chairman Klaus Eckhof told * from Monaco.
“Then also if you look at the usual capital raising time is March/April and after that the window closes until September/October.
“We looked at it around Christmas and then we looked at it four or five weeks ago, but with the Dow volatility it became extremely difficult to actually agree on pricing.”
The placement to a client of Cantor Fitzgerald Canada Corporation will comprise the issue of 60 million shares at 25 cents per share, along with 30 million options exercisable at 30.5 cents within two years.
This will give the investor a 3.2 per cent stake in AVZ.
Can’t go ‘belly up’
AVZ is running five drill rigs at its Manono project, which is costing it around $2 million a month.
Mr Eckhof has described Manono as hosting one of the “longest pegmatite intercepts ever reported”. Pegmatites are rocks formed from lava or magma that are the primary source of lithium.
“Without money you can’t explore,” Mr Eckhof said. “You can’t expose the company to go belly up basically just because some people don’t like it.
“We want to always have enough money in the bank.
“There’s some cash payments, then there’s licence fees, so within two months we would be down to $5 million and then everybody would say why haven’t I raised any money?
“Especially if the Dow has another 15 per cent correction, then it will be virtually impossible to get any interest anywhere, neither Australia nor North America.”