Shares in BPM Minerals Ltd (ASX: BPM) have rocketed upwards on news of an acquisition and placement. At the time of writing the BPM share price is up an incredible 145.24%, with shares in the company swapping hands for 51.5 cents apiece.
BPM announced this morning it has entered into a binding heads of agreement to purchase all shares in Recharge Resources Pty Ltd, which holds 3 projects on the boundary of the Earaheedy Basin.
Market watchers might remember the announcement of a major lead and zinc discovery at the Earaheedy Basin by Rumble Resources Ltd (ASX: RTR) last month.
The BPM acquisition will be supported by a proposed $1.5 million private placement.
Let's take a closer look at today's news from mineral explorer.
Image source: Getty Images
Acquisition and placement
From its acquisition of Recharge Resources, BPM will gain the Hawkins, Ivan Well, and Rhodes projects.
Mining licenses for Hawkins and Rhodes are yet to be granted by the Western Australian Government.
The Hawkins project is just 40 kilometres from Rumble Resources' Chinook Discovery.
According to BPM, Recharge's Earaheedy Basin projects, together, cover 280 square kilometres of the same stratigraphic target zone as the Chinook Discovery.
Previous to the recent discovery of lead and zinc at Chinook, the Earaheedy Basin was known for its potential for iron ore and base metals.
Most previous drilling and soil sampling done at the Hawkins Project's Pinnacles prospect hasn't been assayed for iron or zinc. Meanwhile, drilling and soil sampling previously done at Ivan Well and Rhodes hasn't been assayed for base metals. Though, surface sampling at Rhodes has found areas of high-grade iron.
Recharge also holds a single project in southern Western Australia.
BPM states it's fully funded to complete 15,000 metres of drilling across the 3 Earaheedy Basin projects and 2 of its existing projects – an estimated cost of $5.2 million. It plans to conduct the drilling during the second half of 2021.
It's also planning a $1.5 million private placement to support the acquisition and its future ventures. The placement will involve 7.5 million shares sold at 20 cents apiece, each with one free option with an exercise price of 25 cents. The options must be exercised by September 2025.
Cost of the acquisition
For the acquisition of Recharge Resources, BPM will provide its current holder, Borg Geoscience Pty Ltd, with 1.875 million shares in BMP at a deemed issue price of 20 cents apiece. It will also provide the same number of options with an exercise price of 25 cents, expiring in September 2025.
Borg Geoscience will also receive 2 million performance shares in BPM, subject to various vesting conditions, and 1% of the net smelter return on all products of Recharge's tenements.
There will also be deferred payments given to Borg Geoscience 6 months after settlement or when Hawkins and Rhodes are granted exploration licenses, whichever is later. Upon those milestones, BPM will issue Borg Geoscience with the same amount of shares and options, with the same conditions, as before.
BPM Minerals share price snapshot
BPM executed its initial public offering (IPO) on 30 December 2020 and, before today, the company had not had a great start on the ASX.
Its shares were down 16% year to date when they entered a trading halt before the market opened on Monday.
Now, thanks to today's rally, the BPM share price has gained around 108% since the start of the year.
The company has a market capitalisation of around $12 million, with approximately 24 million shares outstanding.
