Baobab Resources said it could raise up to GBP 7 million via a private placing of shares with a Luxembourg investment fund. Redbird Investments, part of African Minerals Exploration & Development SICAR SCA, has agreed to acquire 50 million shares in the Mozambique focused iron ore exploration group for 8 pence each.

The price represents a modest premium to last night’s close 7.38 pence.

Redbird has also been granted 25 million warrants exercisable at 12 pence, which could bring in a further GBP 4 million.

The cash injection will be used to complete the pre-feasibility study of the Tete Project.

Chairman Jeremy Dowler said that "The company is very pleased to welcome the Fund on board and we look forward to working with them to build Baobab into a successful pig iron producer. The African Minerals Exploration & Development investment brings with it not just the assurance of full-funding beyond the conclusion of the PFS, but also an exceptional depth of experience in the mining finance space, specifically in Africa."

Baobab has a global resource of 482 million tonnes, with over 300 million tonnes in the Tenge-Ruoni area, establishing it as a standalone asset.

The Tete project splits into two distinct parts the Singore area and directly to the north of this, the Massamba Group.

Massamba can then be split into a number of targe tareas Chitongue Grande, Chimbala, the Tenge-Ruoni prospect and finally the rather blandly named South Zone.

Source - Proactive Investors

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