How Will Native Mineral Resources Leverage $3M Convertible Note to Fuel Growth?

Funding Agreement Secured

Native Mineral Resources Holdings Limited (ASX – NMR), a gold producer operating in the Charters Tower region, has entered into a binding agreement with Lind Global Fund III LP to raise A$3 million through the issuance of convertible notes. This initial tranche forms part of a broader funding facility that could extend up to A$10 million, subject to negotiation and company needs.

The convertible notes carry a face value slightly above the issue price at A$3.3 million and feature a fixed conversion price of A$0.15 per share. The notes mature in 12 months, with repayments structured to begin after a three-month holiday period. Notably, Native Mineral Resources retains the flexibility to repay in cash, shares, or a combination, allowing the company to manage its capital structure prudently.

Strategic Use of Proceeds and Shareholder Considerations

The funds raised will be directed towards general working capital purposes, underpinning the company’s near-term operational goals. Managing Director Blake Cannavo highlighted the value of having Lind Global Fund III LP as a funding partner, emphasizing the facility’s flexibility to support ongoing growth initiatives, particularly leveraging the Blackjack Mill across multiple assets in the region.

While the initial $3 million tranche is secured, further tranches up to $7 million remain open for negotiation, providing Native Mineral Resources with optionality to access additional capital as required. The company may seek shareholder ratification to preserve its placement capacity under ASX Listing Rules, ensuring readiness for future capital raising activities without regulatory constraints.

Convertible Note Terms and Potential Dilution

The convertible notes include customary protections and adjustment provisions for corporate actions but exclude floating discounts or variable resets, offering clarity on conversion terms. The investor also receives options exercisable at a premium, potentially adding up to 7.2 million shares if fully exercised.

Conversion and repayment in shares could lead to dilution, with the maximum potential share issuance from the first tranche estimated at approximately 62.8 million shares, representing around 6.26% of the company’s issued capital. However, actual dilution will depend on conversion timing, repayment choices, and market prices at those times.

Market and Regulatory Compliance

Native Mineral Resources has confirmed that the agreement was negotiated at arm’s length with an independent institutional investor and that the terms are market standard. The company has also taken legal advice to ensure compliance with ASX regulations and to avoid any unacceptable features in the agreement.

Investors should watch for upcoming shareholder meetings where ratification of the issue may be sought, as well as any announcements regarding further tranche drawdowns or operational updates linked to the use of proceeds.