5E Advanced Materials, Inc. FEAM recently announced that it has entered into a securities purchase deal with a single institutional investor to buy 5,333,333 shares of common stock in a registered direct offering at a price of 75 cents per share, as well as Series A warrants to purchase up to a total of 5,333,333 shares of common stock and Series B warrants to buy up to a total of 5,333,333 shares of common stock in a concurrent private placement.
Each Series A warrant and Series B warrant will have an exercise price of $0.7981 and will be exercisable six months after issuance. The Series A warrants will expire five and a half years from the date of issuance, while the Series B warrants will expire two and a half years from the date of issuance.
The gross proceeds to FEAM from the registered direct offering and private placement of warrants are estimated to be roughly $4 million before deducting the placement agent’s fees and other estimated offering expenses payable by the company. The proceeds from the registered direct offering and the notes are expected to be used by FEAM to advance the FEL-2 engineering program toward completion and provide working capital to continue operating its small-scale facility and progress its customer qualification program.
The company also entered into debt commitment letters to issue a total of $6 million in senior secured convertible notes to Ascend Global Investment Fund SPC and Bluescape Energy Partners at a conversion price indicating a 25% premium to the registered direct offering price. The notes, which will mature in August 2028, will pay interest in-kind semi-annually at a rate of 10%. The closing of the notes is expected to occur in September 2024.
Shares of FEAM have lost 75.2% over the past year compared with a 10.4% decline of its industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
FEAM currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the basic materials space include Carpenter Technology Corporation CRS, Eldorado Gold Corporation EGO and Newmont Corporation NEM.
Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.9%. The company's shares have soared 141.4% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Eldorado’s current-year earnings is pegged at $1.32 per share, indicating a year-over-year rise of 131.6%. EGO, a Zacks Rank #1 stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 92.6% in the past year.
The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $2.82, indicating a rise of 75% from the year-ago levels. The consensus mark for NEM’s earnings has increased 14% in the past 60 days. NEM, a Zacks Rank #1 stock, has gained nearly 33.4% in the past year.
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