Magnetite Mines Ltd (ASX:MGT) is launching a 1 for 6 pro rata non-renounceable entitlement offer to raise up to $5 million to assist efforts to take advantage of the 'green iron' opportunity presented by its Razorback Magnetite Project in South Australia.
Funds will be used for working capital needs while negotiations with potential strategic partners continue and a decision on a potential transaction is finalised.
Shares in the offer will be issued at $0.31 per share, representing a 16.1% discount to the 15-day volume weighted average price (VWAP) on the ASX of $0.36 a share.
The full suite of Magnetite Mines' directors, CEO and CFO intends to participate in the entitlement offer, either in full or in part.
Capitalising on ‘green iron’ production
“The company has strategically positioned itself to take full advantage of the emerging ‘green iron’ production and export opportunity,” Magnetite Mines chair Jim McKerlie said.
“Both the South Australian and Federal governments have recently commenced formal industry consultation, recognising green iron production as a priority industry for Australia’s economic future.
“Green iron can only be made using premium-quality magnetite iron ore concentrates and Magnetite Mines’ Razorback Project is one of only a handful of magnetite projects worldwide that can produce that quality at scale.
“The company’s priority focus is to conclude negotiations with one or more groups that will partner with the company in the completion of the company’s definitive feasibility study (DFS) and final investment decision (FID).
“I am happy to advise that all directors, the CEO and CFO are participating in the offer; we all believe in this project and are using our combined experience and skills with a view to ensuring that the project is a success with maximising shareholder value at top of mind.
“On behalf of the board, I encourage every shareholder to carefully consider participating in this offer and to take full advantage of the value proposition presented by this exciting shift in Australia’s economic landscape."
Partners essential to success
“We have signalled for some time that strategic partnerships and an operating joint venture are essential for Razorback’s successful development,” Magnetite Mines CEO Tim Dobson said.
“This is a lengthy and detailed process and we are in advanced stages of negotiations with two parties that the company has coveted as potential strategic partners, with a view to entering into joint venture and/or offtake arrangements that, if entered into, would provide funding for the completion of a DFS and other activities required to reach FID.
“In parallel, we have been working closely with both the South Australian and Federal governments to ensure alignment of our strategy with state and federal government policy development for the creation of a new domestic green iron production, and export, industry.
“Industry consultation has commenced separately during the past several weeks at both levels of government and we are positioning Razorback magnetite concentrates as an essential enabling element for this economy-changing opportunity.
“Finally, we have also commenced our project approvals process at the federal level and completed the work required for our Razorback Mining Lease Proposal to the South Australian government, with part of the funding from the offer to be used to complete this submission.”
Magnetite Mines believes it has an “unprecedented opportunity” to become a major iron ore player and a key enabler of Australia’s green iron industry, with a long-life mine in South Australia.