Energizer Resources (EGZ.V) - fund raising planned

Comment by Objective Capital , Jan 24, 2011
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Energizer Resources Inc has announced its intention to complete a US$15m private placement. The company intends to sell 33.33 million units at US$0.45. Each unit comprises one share and one warrant, exercisable at US$0.75 over the 24 months following closing of the placement. At this time, Energizer management anticipates closing the placement shortly. The net funds raised will be used to advance the Green Giant vanadium project in Madagascar. Specifically, Energizer expects to complete a preliminary economic assessment of the project, conduct advanced metallurgical testing and additional drilling. A portion of the funds will go to corporate working capital requirements.

Objective's view:

Successful closing of the planned private placement would put Energizer in a financial position to substantially advance its Green Giant project. The company reported C$1.2m in working capital on Sept. 30 2010 and planned development work at Green Giant for 2011 significantly exceeds this amount. The company could further add to its treasury as a substantial number of warrants currently on issue are now "in the money" and are due to expire near mid year.

We believe that the successful completion of a preliminary economic assessment of Green Giant would represent an important milestone for the project, providing greater confidences in the associated costs associated with the mining plan and the projected vanadium recovery rates.

Green Giant currently hosts a NI-43-101-compliant indicated resource of 49.5 million tonnes, averaging 0.693 percent vanadium pentoxide, and an inferred resource of 9.7 million tonnes, averaging 0.632 percent vanadium pentoxide. Based on this resource calculation, Green Giant ranks as the third-largest known vanadium deposit in the world. Further, additional drilling along previously untested portions of the strike length of the Green Giant zone could add significantly to the amount of mineralisation available to a mine.