Winsome Resources shares down despite project funding commitment

Credit: Winsome Resources

Winsome Resources (ASX: WR1) announced Monday it has received firm commitments of A$25 million in funding to advance its Adina lithium project in the James Bay region of Quebec towards development.

The financing is divided into two parts, the first of which leverages the Canadian flow-through provisions for total proceeds of C$12 million (A$13.1 million), comprising more than 10.32 million shares at C$1.1622 (A$1.275) per share. The issue price represents an approximate 32% premium to Winsome’s last traded price on the Australian exchange.

The second part is a standard share placement for a further A$11.8 million at A$0.85 per share, or an 11.9% discount to the last closing price of A$0.965 on Wednesday, June 12 (trading was halted on Thursday).

The stock resumed trading this week, but is down 16.1% at A$0.81 by market close in Australia for a market capitalization of A$153.7 million.

“The flow through financing provisions under Canadian tax law mean we are again able to raise funds at a significant premium to the current share price and therefore at a lower cost of capital,” Winsome’s managing director Chris Evans said in a news release.

Earlier this year, the company laid out an aggressive plan to scale the Adina project, which rose to prominence in 2022 following the discovery of the Jamar outcrop (now the Main zone) that delivered high-grade results including 1.34% lithium oxide (Li2O) over 107.6 metres.

It subsequently published a new resource estimate of 78 million tonnes grading 1.15% Li2O, of which 61 million tonnes are in the indicated category. The Main zone alone makes up 36 million tonnes at 1.23% Li2O.

This resource, which the company considers to be among the largest in North America, is subject to further growth with possible extension of the known mineralization and continued exploration for new mineralized zones like the recent Adina SW discovery. The new funding will also be directed to these efforts.

Meanwhile, Winsome is planning the development of Adina via two concurrent project studies. The first is a greenfield scenario where a purpose-built lithium processing plant would be constructed on the property. The second is a brownfield project to repurpose the recently acquired Renard diamond processing plant for lithium production.

“The additional funds put Winsome in an enviable position, with one of the largest and growing lithium deposits in North America, an exclusive option to acquire the billion-dollar Renard operation and associated infrastructure and a clearly defined pathway to production,” Evans said.