The Argosy Minerals Limited (ASX: AGY) share price won't be going anywhere today after the mineral exploration company requested its second trading halt this month.
Why have its shares been halted again?
After the market closed on Tuesday the mineral exploration company provided a further update on its placement and offtake agreement with China-based Qingdao Qianyun.
As I have previously written, delays in the due diligence period meant that Argosy Minerals recently pulled the plug on Qianyun's proposed $15 million placement of shares.
That placement would have seen Qianyun take a 19.99% stake in the company at a price of 8.5 cents per share.
This was replaced with a $15 million placement of ordinary shares to institutional and sophisticated investors at 22 cents per share. A significant premium over the original placement and a far better deal for the company and its shareholders.
However, it appears as though Qianyun is not best pleased with the situation and has requested that its offtake agreement be terminated.
Qianyun had previously committed to a $9.5 million upfront prepayment for an agreed quantity of battery grade lithium carbonate equivalent product during the first year of production at its Rincon Lithium Project.
This money was to be used to cover the Stage 2 development expenditure budget for the project.
While management has stated that it will not accept the termination request, it has confirmed that the agreements provide dispute resolution and arbitration mechanisms to resolve such issues.
In the meantime, judging by the company's trading halt request, it appears as though it may be seeking alternative funding as a back-up.
Argosy Minerals shares are expected to remain in a trading halt until Friday. Unless the company can come up with a satisfactory alternative, I suspect they could face significant selling pressure.
