Zenith Minerals Launches $3.5m Underwritten Offer to Boost Gold Drilling

Entitlement Offer Details

Zenith Minerals Limited (ASX, ZNC) has announced a non-renounceable pro rata entitlement offer to raise approximately $3.5 million before costs. The offer invites eligible shareholders to subscribe for two new shares for every seven existing shares held at an issue price of $0.03 per share. Additionally, shareholders will receive one free-attaching new option for every three new shares subscribed, exercisable at $0.077 and expiring in July 2027.

The offer is fully underwritten by Leeuwin Wealth Pty Ltd, with sub-underwriting arrangements involving Zenith’s Managing Director Andrew Smith and Non-Executive Director Euan Jenkins. Other directors have committed to fully participate in the offer, signalling strong insider confidence.

Strategic Use of Funds

Proceeds from the entitlement offer will primarily fund drilling programs across Zenith’s key gold projects. The Dulcie Far North Project will receive $900,000 to support approximately 4,000 metres of reverse circulation drilling aimed at upgrading the existing inferred mineral resource of 210,000 ounces of gold. Another $900,000 is allocated to drilling at the recently acquired Dulcie Project, targeting a maiden inferred resource and expansion of the company’s strategic footprint.

The Red Mountain Gold Project in Queensland will receive $700,000 to undertake deep diamond drilling targeting high-grade gold and potential copper-molybdenum mineralisation within an intrusion-related gold system. This program benefits from a $275,000 government grant under the Collaborative Exploration Initiative, underscoring its strategic importance.

Remaining funds will support general working capital and cover offer costs, ensuring operational flexibility as Zenith advances its exploration agenda.

Shareholder Impact and Offer Mechanics

The offer is open to shareholders registered as at 19 June 2025 with addresses in Australia, New Zealand, or the United Kingdom. Shareholders may also apply for additional shortfall securities up to 50% of their entitlement, subject to board discretion. The offer closes on 7 July 2025, with new shares expected to commence trading on 14 July 2025.

Upon completion, the capital structure will increase by approximately 29%, with new shares representing 22.2% of the issued capital. To mitigate control risks, no shareholder will be permitted to exceed a 19.9% holding as a direct result of the offer. The underwriting arrangement ensures full subscription, but the final shareholding of the underwriter will depend on shareholder uptake.

Risks and Considerations

Zenith’s prospectus outlines a comprehensive range of risks typical for mineral exploration companies. These include dilution risks for shareholders who do not participate, title and native title risks related to mining tenements, environmental and Aboriginal heritage considerations, and commodity price volatility. Operational risks such as exploration success, development challenges, and regulatory approvals are also highlighted.

The sale of Zenith’s 20% interest in the Kavaklitepe Gold Project in Turkey is pending regulatory approval, which could impact expected cash flows. Market conditions and geopolitical uncertainties, including conflicts in Ukraine and the Middle East, add layers of external risk that may influence investor sentiment and share price performance.

Looking Ahead

Zenith Minerals’ fully underwritten entitlement offer represents a critical capital injection to advance drilling programs that could materially enhance its gold resource base. The involvement of directors in underwriting and participation underscores management’s commitment. Investors will be watching closely for shareholder uptake rates, drilling results, and regulatory developments in the coming months.