PhosCo (ASX:PHO) said it was formally granted an exploration permit for and secured ownership of the Gasaat phosphate project in Tunisia, according to a Tuesday Australian bourse filing.

The project hosts a resource estimate of 146.4 million tonnes at nearly 21% grade of phosphorous pentoxide, with numerous drilling targets identified.

PhosCo launched a non-renounceable 1-for-2.84 entitlement offer to raise around AU$5 million at AU$0.05 per new share, with directors and major shareholder Lion Selection Group (ASX:LSX) committing to priority sub-underwriting commitments totaling AU$3.3 million.

Eligible shareholders who subscribe for their full entitlement under the offer can apply for oversubscriptions of up to a further 20 million new shares at AU$0.05 per new share to raise a further AU$1 million.

The company will use the funds for exploration work, metallurgical test work, and scoping study for its projects in Tunisia, among other purposes.

Lion Selection Group and PhosCo's managing director, Taz Aldaoud, also agreed to advance a loan to PhosCo for AU$1.5 million to fast track work at the Gasaat project and the Sekarna project, also in Tunisia.

PhosCo also signed a mandate letter with the European Bank for Reconstruction and Development for a potential $5 million strategic investment in one or more tranches at AU$0.05 per share. The investment would grant the lender the right to appoint a director at the firm.

It also said that all holders of the converting notes issued on March 15, 2024, and October 16, 2024, agreed to extend the maturity date of the converting notes to April 24 from March 15 to allow the completion of the entitlement issue. Interest will continue to accrue during this extended period at 10% per year.

The company plans to start a drilling program immediately, including extensional drilling at the Gasaat project and scout drilling at the Sekarna project, to grow its total inventory and forecast production rate ahead of a bankable feasibility study at the Gasaat project.