Magnetite Mines Ltd (ASX:MGT) has secured up to $7 million in funding from two investment funds managed by US-based C/M Capital Partners, LP – C/M Capital Master Fund, LP and WVP Emerging Manager Onshore Fund LLC – C/M Capital Series.
Funds for Razorback development
The funding agreement provides Magnetite Mines with essential working capital to progress its Razorback Project, a large-scale, low-cost magnetite resource with growing global significance.
C/M Capital has a pedigree of making similar investments in ASX-listed companies, including development-stage resource companies.
“We see a significant value disconnect between Magnetite Mines’ current market valuation and the strategic potential of their multi-decade asset,” C/M Capital Partners LP managing partner Jonathan Juchno said.
“With strong long-term prospects for high-grade iron ore products, we are confident in the management team's ability to advance the project through key milestones expected in the coming months.”
The funding, structured as unsecured convertible notes, will go a long way towards supporting the development of Razorback, including regulatory approvals and strategic partnership negotiations.
Strategic use of funds
The funds will be allocated to lodging the Razorback Mining Lease Proposal (MLP) with the South Australian Government.
This comprehensive submission, representing years of development, is expected to incur a submission fee of $560,000 and will trigger the formal state government approvals process for the Razorback mine.
The money will also be channelled into advancing negotiations with strategic partners, including JFE Shoji Australia, under the Heads of Agreement announced in July 2024.
Magnetite Mines is engaging with additional potential co-investors to secure a long-term development framework for the Razorback Project.
The capital will also support the definitive feasibility study (DFS) and other key works required to achieve a final investment decision (FID).
Funding structure
The funding will be delivered in tranches:
- First tranche - $1.2 million in convertible notes with a face value of $1.296 million to be issued within 15 business days under Magnetite Mines’ existing ASX Listing Rule 7.1 placement capacity, subject to standard closing conditions.
- Second tranche - $1.3 million in convertible notes with a face value of $1.404 million, subject to shareholder approval at an Extraordinary General Meeting (EGM) to be held by March 15, 2025.
- Subsequent tranches - Up to $4.5 million in additional convertible notes, subject to mutual agreement, compliance with approvals and shareholder consent.
Key terms include a nil interest rate, a 24-month maturity period and the option for C/M Capital to convert notes into shares based on volume-weighted average price (VWAP).
The facility also incorporates customary investor protections and limits C/M Capital's ownership to 9.99% of Magnetite Mines’ issued share capital.
Pivotal time for project
Magnetite Mines managing director Tim Dobson said: “We are very pleased to have secured C/M Capital Partners as our funding partner at this pivotal time in the development of our flagship Razorback Iron Ore Project.
“Providing timely funding to the business as we complete detailed definitive agreements with JFE Shoji Australia for the provision of DFS funding and long-term strategic partnership, this facility allows us to submit our all-important Mining Lease Proposal to the South Australian Government as well as access to essential working capital.
“The form of funding, being convertible notes, provides a level of flexibility as we continue to attract new partner interest for the development of Razorback.”
Magnetite Mines will convene an EGM by March 15, 2025, to seek shareholder approval for the issuance of the second tranche of convertible notes and options as well as approval for future issuances of up to $4.5 million in additional convertible notes.