Macarthur Minerals Balance Sheet Materially Strengthened by Financing Package

Highlights
Firm commitments received from a private placement to sophisticated and institutional investors raising approximately of AUD 6.25 million at an issue price of AUD 0.55 bolsters working capital.AUD 20 million standby equity finance facility secured under Controlled Placement Agreement improves Macarthur’s balance sheet. Facility can be drawn down at the discretion of the Company.Bolstering of Macarthur’s balance sheet (in combination with the release of all debt under the recently converted convertible notes) positions the Company well to move through the next critical phases of project delivery and target simultaneous completion of its main project financing strategy for the Lake Giles Iron Project with EAS Advisers.
VANCOUVER, British Columbia, Oct. 13, 2020 (GLOBE NEWSWIRE) — Macarthur Minerals Limited (ASX: MIO) (TSX-V: MMS) (OTCQB: MMSDF) (the “Company” or “Macarthur”) is pleased to announce the completion of a material financing package (“Financing Package”) comprising:a private placement to be completed in two tranches (the “Offering” or “Private Placement”) of AUD 6,249,446 million with institutional and sophisticated investors; anda standby equity commitment to provide up to AUD 20 million in equity financing (“Equity Finance Facility”), which can be drawn at the discretion of the Company.
Cameron McCall, President and Executive Chairman of Macarthur Minerals commented:“We are delighted with the interest in the placement which is a strong endorsement from the investment community. With iron ore prices continuing to defy broader global impacts from the COVID-19 pandemic, investor demand in the placement demonstrates market confidence continues to build around Macarthur and its ability to deliver the Lake Giles Iron Project for shareholders.That confidence is pleasing, but it is also matched by the determination of the Board and Management to ensure that every opportunity is maximised to deliver Macarthur’s high-grade, low impurity magnetite product with the development of one of the first new-generation magnetite mines in Western Australia.The completion of this Financing Package is material for the Company. Balance sheets “open doors”, and as Macarthur approaches the next phase of key negotiations to deliver its Feasibility Study for the Lake Giles Iron Project, the flexibility that the package will provide to the Company is extremely important.Bolstering the Company’s balance sheet, (in combination with the release of all debt under the recently converted convertible notes) places the Company on a strong footing and positions Macarthur well as it moves through the next critical phases of project delivery and as its targets simultaneous completion of the main project financing strategy for the Lake Giles Iron Project with EAS Advisers.”Details of the Financing Package are set out below.Overview of Financing PackagePrivate PlacementThe Company has received firm commitments from sophisticated and institutional investors to subscribe for a total placement of 11,362,629 fully paid ordinary shares (“New Shares”) at a price of AUD 0.55 per share for a total consideration of AUD 6,249,446.Each placement unit (“Unit”) is comprised of one New Share and one attaching whole option to acquire one fully paid ordinary share in the Company (each, an “Option”). Each attaching Option has an exercise price of            AUD 0.90, with an expiry date that is 24 months from the date of issuance.The placement price per New Share represents a 7.08% discount to the 30 day volume weighted average price (“VWAP”) of the Company’s Australian Stock Exchange (ASX) listed shares to 7 October, 2020. The New Shares will rank equally with the Company’s existing ordinary shares. The placement will be closed in two tranches as soon as possible after and subject to receipt of all necessary regulatory approvals including ASX and TSXV approvals.Subject to exchange approvals and acceptance:the first tranche of the Placement securities (being 11,362,629 New Shares and 5,137,371 Options) the securities will be issued within the Company’s existing ASX Listing 7.1 capacity.   the second tranche of the Private Placement (being the balance of 6,225,258 Options) will close on 2 November 2020. Tranche 2 will be subject to receipt of shareholder approval for the issue of the tranche 2 securities to be sought at the Company’s upcoming Annual General Meeting on 30 October 2020.
The net proceeds from the Offering will be used for working capital purposes as the Company continues to make progress towards completion of its Feasibility Study for the Lake Giles Iron Project in the Yilgarn region of Western Australia (“Project”), and as it advances discussions on its main round of project financing for the Project.Equity Finance FacilityIn addition to the Private Placement , the Company has executed a Controlled Placement Agreement with L1 Capital Global Opportunities Master Fund (“L1”), which will provide flexibility to the Company in regard to supplementary access to additional equity, if required, and at the Company’s election. The agreement entitles the Company to issue shares to L1 over 36 months under “Placement Notice(s)” at the Company’s discretion, and to receive funds for the issue of those shares on the following key terms:Term: 36 months.Purchase Price: Placement Shares are priced at the greater of 90% of:

(i)  the average daily VWAP over 30 Trading Days of the Company’s Australian Securities Exchange (ASX) listed shares following delivery of a Placement Notice (Pricing Period); and

(ii)  the Minimum Acceptable Price nominated by the Company (provided that the discounted Minimum Acceptable Price cannot be lower than any minimum price required under the ASX Listing Rules or the TSX Listing Rules, and in any event not less than AUD 0.20).

Placement Shares: The maximum number of Shares that can issued under a Placement Notice cannot exceed 10 times (or 1000%) of the average daily number of Shares traded on ASX and TSXV (in aggregate) during the 15 Trading Days prior to and excluding the applicable Placement Notice Date.Completion: Completion of each Placement will take place after the relevant Pricing Period, at which time L1 will pay the determined Purchase Price for the Placement Shares and the Company will issue the Placement Shares to L1 (or its nominee).Share Lending: In order to give a Placement Notice, the Company must have procured for a third party to loan the requested number of Placement Shares to the Investor. These loan shares are to be returned by the Investor to the lender on the Investor receiving tradeable Placement Shares. The lender will receive no consideration for providing the loan shares.Fees: Macarthur will pay L1’s reasonable legal costs up to a maximum of USD 20,000. If Macarthur terminates the Controlled Placement Agreement early, then it will pay a USD 100,000 Termination Fee to L1. No other fees are payable by the Company to L1 under the Controlled Placement Agreement.
There is no immediate dilutionary impact from the Equity Finance Facility, which the Company will maintain and may draw upon as necessary, to support the Company’s pre-delivery phase for its Lake Giles Iron Project and other value accretive endeavours for the benefit of the Company and its shareholders.Any future issues of Shares under the Controlled Placement Agreement are expected to be issued under the Company’s ASX Listing Rule 7.1 placement capacity (or other shareholder approved and available capacity from time to time) if and when the Company draws down under the Equity Finance Facility.Advisory FeesThe advisory fees payable for the Private Placement and the Equity Finance Facility are summarised below.Fees for Private PlacementEAS Advisors, LLC, through Odeon Capital Group LLC (“Odeon“) acted as financial adviser for the Private Placement. Pursuant to a Consulting and Advisory Agreement between Odeon and the Company dated 9 October 2020, Odeon will receive an Equity Placement Financing Completion Fee equal to 6% (six percent) of the gross proceeds raised from investors in the equity capital raising and received by the Company in cleared funds. The total Equity Placement Financing Completion Fee payable to EAS for completion of the Offering following close will be AUD 374,966.76, resulting in the Company receiving net proceeds from the Offering of AUD 5,574,479.24.