India Resources funding facility to underpin growing demand for raw materials in India

India Resources (ASX: IRL) has entered into a $5.5 million equity funding facility with the Chimaera Equity Market Neutral Fund, which will help fund some significant mine contracting opportunities in India.

As one of few foreign mining services companies to successfully operate projects in India, the placement and funding facility provide optimum flexibility to India Resources to fund growth.

Under the terms of the facility, Chimaera EMN will subscribe for an initial placement of 31 million fully paid shares at $0.02 to raise $620,000, an 18% premium.

The placement will occur in two equal tranches, with the first tranche to be completed by 25 February 2011, and the second upon execution of definitive agreements.

Along with the initial placement, drawdowns under the facility are within the discretion of the company.

India Resources currently has some exciting projects in the pipeline, and recently announced its intention to participate in several significant contracting opportunities presented by existing client Hindustan Copper Limited (HCL).

To support its commitment to these projects the company has entered into an agreement with the large Polish mining services group, Kopex.

This strategic alliance between India Resources and Kopex positions the company perfectly for the expected rapid growth in the mine contracting business in India.

India Resources said Kopex shares a similar view on the outlook for mining services in the country, and therefore the parties have agreed to jointly pursue other opportunities, in addition to those presented by HCL.

Added to this for India Resources are the two new long term coal mine development agreements secured at the level of preferred contractor status, and the upcoming HCL contracts coupled with the established Surda Copper operation, this funding facility will provide the necessary security to underpin the growth of the company’s mining contracting division.

Andrew Kemp, the Investment Manager of Chimaera EMN indicated his strong support for the India Resources prospects, and said, “Its partnership with Kopex and the ever growing demand for raw materials in India puts the company in a unique position to grow beyond the rate of its peers in the next few years.

"We also see significant untapped value in connecting resource supply from Australia with increasing demand from India.”

The facility was arranged by Empire Equity Limited, a London based private merchant bank.