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Minerals exploration company Latin Resources recently completed a A$35 million capital raise that included a A$15 million cornerstone investment from a Canadian Environmental, Social, and Governance (ESG) Fund.
With the completion of the raise, Latin has overcome a common challenge facing early stage companies — attracting adequate capital to execute on their strategies.
That’s especially true for early stage mining exploration companies. It’s rare for junior explorers to raise substantial amounts of capital or attract institutional investors to their share registers in the early exploration stages.
Yet Latin Resources has done just that. The company, whose shares trade on the Australian Securities Exchange, is exploring and developing commodities that assist in the transition to net zero emissions. Its current focus is its Salinas Lithium Project in Brazil, where it is undertaking early stage lithium exploration drilling.
Latin Resources described the A$35 million raise as ‘transformational’, and it is clear why when considering that the company held just A$3.4 million in cash and A$1.9 million in investments at the end of the last quarter.
The raise to institutional and sophisticated investors was anchored by the A$15 million cornerstone investment by the Electrification and Decarbonization AIE LP Fund (E&D Fund), a 100%-owned subsidiary of Canada’s Waratah Capital Advisors.
Waratah Capital Advisors manages over C$3.5 billion in assets and explicitly states that it integrates ESG factor criteria into its investment process.
Its E&D Fund invests in critical battery material companies and related decarbonisation and electric vehicle related investment opportunities.
Raising such a large sum, especially in the current volatile market, is a significant accomplishment. Again, junior explorers rarely see amounts like this raised until after they have made a discovery that warrants the attention of institutional investors.
It’s fair to assume that Latin Resources’ ability to stand out in a sea of junior explorers may have a lot to do with its ESG credentials.
Latin Resources started reporting against the World Economic Forum’s Stakeholder Capitalism Metrics ESG Framework last year using Socialsuite’s ESG platform for small and medium sized companies. They set out to demonstrate all the work they are already doing on the ground. Upon starting their ESG reporting, a lot of the ESG metrics to report were already there, they just needed to be captured in a visible framework in order to reach stakeholders.
Since then, Latin Resources has worked to publish, share, and promote — using its ESG report to position its business for ESG investment. This makes it an easy task for potential investors to screen the company on ESG credentials and tick their boxes.
Latin Resources’ ESG journey and first disclosure report has paid off almost immediately.
On top of raising the A$35 million, Latin also expects that its ESG credentials will drive strong partnerships with industry leading battery producers and off take deals.
Socialsuite has identified six common areas that companies create value through ESG — accessing capital is just one. So Latin Resources can expect plenty of other benefits to flow through over time related to compliance and risk management, information flows and investor relations, profitability and growth, reputation and branding, and measurable achievements.
Latin Resources’ latest quarterly ESG Reports can be found on the company’s website.