Baobab Resources PLC (AIM: BAO) said Astaire Securities has raised £2.75 million before expenses through a placing of 45,833,334 shares in the group at 6.0 pence each, with the money to be used to fund exploration projects in Mozambique and increase Baobab’s working capital resources.
The placing utilises the existing authorities and the placing shares equate to 29.6 percent of the enlarged issued share capital.
Non-executive chairman Jeremy Dowler said "We welcome a number of new institutional shareholders to the company. The completion of this fundraising allows us to rapidly advance drilling programmes, scoping studies and further metallurgical testwork on the Tete magnetite-ilmenite deposit. We now have sufficient funds to develop this project until the end of 2010 and will seek to negotiate strategic partnerships in the intervening period".
Early this month, the company reported “very encouraging” results of a scoping study undertaken for its Tete project in Mozambique.
The study recommends that continued project development work is undertaken. Financial modelling points toward positive project economics in the production of multiple commodities from a notional mineralised tonnage of 300 million tonnes, and the analysis of mineral processes further indicates that high quality iron, vanadium and titanium concentrates may be produced.
The announcement followed hard on the heels of September’s news of a maiden JORC compliant 47.7 million tonnes inferred mineral resource at Tete with an average concentrate of 63.7 percent iron and the subsequent announcement that independent interpretation completed by Coffey Mining indicates an exploration potential of an additional 400-700 million tonnes of magnetite-ilmenite mineralisation to a depth of 250 metres below surface in the Massamba Group area of the project.
Baobab formed a strategic partnership with the International Finance Corporation in January 2009 whereby IFC earned a 15 percent direct interest in the Tete project.