It is reported that IronClad Mining has secured a AUD 6 million investment from Hong Kong based investor New Page Investments which will be used to finance start up works at the Wilcherry Hill site due to begin later this month.
The funds were raised through a placement of 7.5 million shares at USD 0.80 per share which represents a 20% premium on the closing price of USD 0.665 on 10 January 2012. The shareholding gives New Page Investments a 9.02% interest in IronClad.
New Page Investments is the major shareholder in China-based global steel trading, distribution, processing and manufacturing company Novo Group which is dual listed on the Hong Kong and Singapore stock exchanges and already has investments in the Australian iron ore industry.
IronClad has the potential to attract further investment as the company becomes the second smaller mining company to move into production in South Australia.
Mr Ian Finch executive chairman said “The successful conclusion of this share placement marks another significant milestone in what will be a defining year for the company and its shareholders and in the development of our Wilcherry Hill asset.”
He said negotiations for the additional offtake agreement are expected to be finalised later this week and will involve 50% of all iron ore produced by the IronClad-Trafford Resources joint venture in the first four years of operations.
The share placement follows close on back of the South Australian Government recent formal approval for IronClad Program for Environmental Protection and Rehabilitation the final statutory hurdle for the project.
IronClad is close to formalising another offtake agreement for production from the Wilcherry Hill project on South Australia Eyre Peninsula. Maiden production from the mine is due to begin in the current March quarter with the first shipment of iron ore on track to be exported to Chinese customers in the June quarter.
The first two years of production from Stage One of the Wilcherry Hill project has already been sold to the Chinese steel mills under a comprehensive sales contract and marketing agreement.
First year of production involves 1 million tonnes per annum of direct shipping ore for export to Asia increasing up to 2 million tonnes per in the second year.
A Feasibility Study for Stage One of the project established that with an average iron ore price of USD 140 per tonne free on board into China and initial operating costs of around USD 85 per tonne, the project would provide IronClad with margins of USD 50 per tonne and an operating cash flow of around USD 80 million per year at full production during the first stage.
Stage Two involves an increase in production to 5 million tonnes of iron ore concentrate per annum.
(Sourced from www.proactiveinvestors.com.au)
