Centrex Launches $10.4M Entitlement Offer to Fund Critical Plant Upgrades

Entitlement Offer Launch and Strategic Context

Centrex Limited (ASX: CXM) has announced the launch of a $10.4 million entitlement offer, inviting eligible shareholders to subscribe for new shares at a discounted price of $0.012 each. This capital raise is a critical step in securing the company’s financial footing and advancing its Stage 1.5 Expansion at the Ardmore Phosphate Project. The offer includes one free attaching option for every two new shares subscribed, exercisable at $0.02 before March 2026.

The entitlement offer follows a recent strategic agreement with Centrex’s logistics supplier, which restructured trade debts and improved the company’s working capital position. This restructuring, combined with the capital raise, aims to stabilize Centrex’s financial viability and provide the necessary resources to complete essential plant upgrades.

Use of Proceeds and Operational Implications

The net proceeds from the entitlement offer will be allocated primarily towards plant upgrades ($4.25 million), tailing facility enhancements ($1.19 million), workshops and camp expansion ($0.69 million), and working capital ($3.67 million). These investments are designed to increase production capacity to 625,000 tonnes per annum of beneficiated phosphate, a key milestone for the Ardmore project’s development.

CEO Robert Mencel emphasised that the capital raise is vital for executing Centrex’s strategy with confidence, leveraging Ardmore’s significant on-site inventory and long-standing customer relationships. The successful completion of the entitlement offer is expected to position Centrex strongly for potential high-growth initiatives in the phosphate sector.

Offer Mechanics and Risks

The entitlement offer is structured as a pro-rata, non-renounceable offer to eligible shareholders in Australia and New Zealand, excluding US persons. Shareholders will receive one new share for every share held as of the record date, with the offer priced at a 29.4% discount to the last traded price and a 42.9% discount to the 15-day VWAP.

A minimum subscription threshold of $9 million must be met for the offer to proceed. Failure to reach this minimum could force Centrex to explore alternative funding options, including asset sales or operational shutdowns at Ardmore. The offer is not underwritten, adding an element of uncertainty to the capital raise’s success.

Financial Outlook and Market Position

Upon successful completion of the entitlement offer, Centrex projects a pro forma net cash position of approximately $9.8 million as of 14 February 2025. This liquidity boost is expected to underpin ongoing operations and provide a buffer for future growth opportunities.

Centrex’s focus on phosphate and potash projects aligns with growing global demand for sustainable agricultural inputs. The company’s strategic location near established energy and transport infrastructure further supports its market access and operational efficiency.

Investors will be watching closely to see how the market responds to the offer and whether Centrex can secure the necessary funding to maintain momentum in its development plans.