Magnetite Mines Ltd (ASX:MGT) has closed a 1 for 6 pro rata non-renounceable entitlement offer with $1.17 million raised from existing shareholders in the offer and from shortfall applications received to date.
The company has appointed Mahe Capital Pty Ltd as its placement agent to place the remaining shortfall within the three-month period following the close of the offer on Friday, July 19, 2024.
In a show of confidence in the company’s ‘Green Iron’ strategy centred on its Razorback Magnetite Project in South Australia, all Magnetite Mines directors, CEO and CFO participated in full or in part.
Use of funds
Funds raised, net of costs, will be used to provide the working capital needed to finalise the company’s transaction with JFE Shoji and to continue operations whilst negotiations with other strategic partners continue.
The board’s priority was to preserve shareholder value via an entitlement offer in the first instance and as such the company would like to thank shareholders for their support.
“Validation of opportunity”
Magnetite Mines chair Jim McKerlie said: “The company is committed to achieving its long-term aim of developing our extremely valuable, large-scale magnetite resources as we enter an exciting new phase of development.
“The recently signed Heads of Agreement with JFE, Japan’s second-largest steelmaker, provides validation of the opportunity and both parties are committed to finalising definitive agreements.
READ: Magnetite Mines signs green iron supply deal with JFE Shoji Australia
“We extended the offer when the JFE announcement was made to give all shareholders an opportunity to understand the major implications of this partnership.
“We have also just signed an MoU with Australian renewable energy company ZEN Energy to support the development of a Green Iron industry in South Australia, which is fully aligned with ambitious new State and Federal government policies. Building these relationships and furthering discussions with other potential strategic partners is an ongoing priority for the company.
“We were also delighted to announce earlier this week that our team pioneered test-work that demonstrated the potential to produce Green Iron feed grade magnetite concentrates using saline water. Water is a key ingredient in a project of this scale and the use of saline water has enormous positive implications on capital and operating costs.
“The board are very conscious that we will need substantial capital to become a tier-1 iron ore producer.
Support appreciated
"It is for this reason that we wanted to offer shareholders what may be their final chance to participate in an entitlement offer. The remaining shortfall from the offer will now be placed at the same price with those parties that could not participate in the shareholder offer,” McKerlie said.
“On behalf of the board, I would like to thank shareholders, including fellow directors and management, who have participated in the entitlement offer.
“We truly appreciate your support and recognition of the unprecedented opportunity for Magnetite Mines to become a major iron ore player and key enabler of Australia’s emerging Green Iron industry.”
In connection with the offer, the company will issue 3,769,666 new fully paid ordinary shares. The new shares are expected to be issued on Friday, July 26, 2024, and will begin trading on the ASX on a normal settlement basis from Monday, July 29, 2024.
“Excited by interest”
“Razorback is one of only a handful of new projects globally that can meet the requirements for Green Iron and Steel production at scale, and we are excited by the interest from both strategic partners and government as this new industry opportunity emerges," Magnetite Mines CEO Tim Dobson said.
“We are now seeing a clear trajectory towards the establishment of a new Green Iron industry in Australia and globally.
READ: Magnetite Mines welcomes study revealing South Australia's green iron advantage; prepares EOI
"To this end, the company recently lodged a submission in response to the Federal Government’s Green Metals Industry Consultation Paper and it is currently preparing a separate submission in response to the South Australian Government’s Expression of Interest process for creating a Green Iron industry in the State by 2030.
“As the demand for Green Iron continues to accelerate, MGT remains focused and committed to the rapid development of our world-class Razorback magnetite resource.”