Centrex Limited (ASX:CXM) Updates on Entitlement Offer and Expansion Plan
Centrex Limited has launched an Entitlement Offer to raise approximately A$10.4 million to support the completion of its Stage 1.5 Expansion at the Ardmore Phosphate Project. The offer consists of a pro-rata, non-renounceable entitlement offer allowing eligible shareholders to purchase one new share for each share held at an issue price of A$0.012 per new share.
Entitlement Offer Details
To successfully execute the offer, a minimum subscription of A$9 million must be achieved, or the company may seek alternative funding sources, putting ongoing operations at risk. Centrex anticipates that, upon completion of the Stage 1.5 Expansion, production capacity will reach 625,000 tonnes per annum (ktpa) of beneficiated phosphate concentrate, considerably enhancing its operational efficiency.
Stage 1.5 Expansion Plans
The Ardmore Phosphate Plant Upgrade is central to the Stage 1.5 Expansion, which aims to enhance processing capacity to 140 tonnes per hour while ensuring minimal operational disruptions. The upgrade is expected to improve product quality by reducing undesirable ultrafine materials.
Financial Position and Strategic Agreements
Centrex’s current liabilities have decreased due to strategic agreements, including a deed of forbearance with Aurizon, strengthening its working capital. Following the successful completion of the Entitlement Offer, the Company plans to establish a solid financial foundation essential for both the ongoing expansion and enhanced production capacity.
Market Outlook and Risks
Centrex operates within a competitive phosphate market, which is projected to grow steadily. However, inherent risks remain, including the need for operational stability amid economic fluctuations. The current cash position of approximately A$0.48 million necessitates the successful raising of additional funds through the Entitlement Offer.
The company’s ability to maintain operational continuity and achieve its expansion targets hinges on various factors, including existing contractual agreements and broader market conditions.
Motley Fool contributor Abbie Stokes has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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