ASX-listed West Wits Mining has secured firm commitments from unrelated existing and new sophisticated and professional investors to raise $1.5-million before costs through the issue of convertible notes.

The company says demand for the capital raising was substantially above the $1.5-million available.

The issue of convertible notes is subject to shareholder approval which the company intends to seek at an extraordinary general meeting (EGM) that is likely to be held in early October.

West Wits says it will receive the subscription funds for the convertible notes from investors on or around August 29 as a loan, pending receipt of shareholder approval.

The company notes that $500 000 of the funds raised will be used for the company’s Qala Shallows operations, the flagship project of its bigger Witwatersrand Basin project, in Johannesburg.

The issue of the convertible notes is to occur shortly after receipt of shareholder approval at the EGM. If shareholder approval is not received at the EGM, West Wits says the loan represented by the subscription funds for the convertible notes will be repayable within four months of the EGM.

As foreshadowed in the company’s recent quarterly activity report, a due diligence process by a second commercial bank has begun.

The process involves the appointment of external technical and legal experts to act for the bank. As is customary in commercial banking transactions, the company as borrower is responsible for payment of the lender's professional out-of-pocket costs arising from the due diligence investigation.

The incurring of these additional costs impacted on forecast cash flow materially and the board felt it prudent to undertake a modest fundraising to meet those costs whilst also ensuring that it maintains a comfortable cash buffer pending finalisation of the project’s full funding.

West Wits says the terms of the capital raising allowed the company to calibrate the conversion price of the notes at a significant premium to the current share price for an initial five-month period, which is preferable to a placement which would usually be made at a discount.

West Wits says each convertible note has an issue price and face value of $25 000. The convertible notes have a conversion price of $0.02 until January 17, 2025, and thereafter have a conversion price of the lesser of $0.02, or a 20% discount to the 15-day volume-weighted average price of West Wits’ shares at that time.

In lieu of interest, the company says it will issue investors in convertible notes 25 unlisted options – at $0.023 exercise price and expiring 36 months from issue – for every $1 subscribed for convertible notes – total of 37.5-million unlisted options.

“West Wits would like to acknowledge the efforts of Ignite Equity, which put forward this funding structure and acted as lead manager of the capital raising,” the company says.