Coolabah’s $20M Raise and Broken Hill Deal: What Could Go Wrong Next?

Strategic Capital Raise and Acquisition

Coolabah Metals Limited (ASX, CBH) has announced the early closure of its upsized public offer, successfully raising $20 million at $0.35 per share. The strong investor appetite prompted the company to close the offer ahead of schedule, underscoring market confidence in its strategic direction. This capital raise is a critical step in funding the acquisition of Broken Hill Mines Pty Ltd (BHM), a transaction that promises to consolidate two of the three mining companies controlling all current silver, lead, and zinc operations at the iconic Broken Hill mining district.

Details of the Acquisition Transaction

The acquisition involves issuing 125 million shares and 65 million unquoted options to BHM vendors, with options split between exercise prices of $0.36 and $0.50, expiring in five years. Additionally, 20 million shares will be issued to reflect the cash holdings of BHM and its subsidiary, Broken Hill Operations Pty Ltd, valued at $8 million. A 2% net smelter royalty has also been granted on the Rasp and Pinnacles mines, effective from January 1, 2025, payable only upon completion of the transaction.

The deal is subject to several conditions precedent, including shareholder approval, a minimum capital raise of $15 million, maintenance of the Pinnacles Heads of Agreement, and ASX confirmation of the company’s securities reinstatement. All shareholder resolutions were passed at the June 20 general meeting, clearing a significant hurdle for the transaction.

Financial Position and Corporate Outlook

Coolabah reported a robust cash position of approximately $21.84 million at the end of June 2025, bolstered by the recent capital raise. The company’s financial statements show disciplined expenditure on exploration and corporate costs, positioning it well to advance its exploration programs and integration of the Broken Hill assets.

Beyond Broken Hill, Coolabah maintains a diversified portfolio of exploration projects across Australia and Canada, including the Coolabah, Nymagee, Gunpowder Creek, Cannington, Mundi Mundi, Hampden, and McCoy Lake projects. These assets span copper, gold, base metals, lithium, and non-metallic minerals, aligning with the company’s strategy to build shareholder value through discovery and development in both established and emerging mineral provinces.

Governance and Management Changes

As part of the acquisition, BHM vendors have the right to nominate up to four directors to Coolabah’s board, with one director retained from the existing board. This board reshuffle reflects the strategic importance of the transaction and the integration of Broken Hill Mines into Coolabah’s corporate structure.

Looking Ahead

With the public offer closed and shareholder approvals secured, Coolabah is now focused on satisfying remaining conditions precedent, including ASX reinstatement of its securities. The successful completion of this transaction will mark a significant milestone, positioning the company as a leading consolidated player in the Broken Hill mining region with enhanced scale and resource potential.