Radar Iron (ASX:RAD) should firm in trade after revealing that Lightshare Investments has become a new cornerstone investor.
Funds will be used towards investment at its newly acquired Yerecoin iron ore project in Western Australia which has potential to be one out of the box.
Lightshare, a private company owned by the major shareholders of Resource Development Group (ASX:RDG) has agreed to a 17.2 million share placement in Radar at $0.05, and now owns 17.5% of Radar’s issued capital.
This comes after after Radar's acquisition of Yerecoin from Cliffs Magnetite Holdings and its joint venture partners, Sojitz Mineral Development, and Nippon Steel, in April.
Radar concurrently raised $860,000, also at $0.05 per share to RDG to fund the purchase.
This was a substantial premium to Radar's share price at the time of $0.03, and RDG is the owner of project delivery company Engenium which has carried out engineering studies on the project.
These studies by RDG's subsidiary indicated potential economic viability and expected low capital cost; presumably the basis of their investment decision.
Consideration for the acquisition entails $860,000 on signing the agreement, $1.44 million by November 30th 2014; $1.44 million by April 17, 2015, and a royalty of $1 per dry tonne of concentrate.
Radar will complete sufficient studies in coming months to demonstrate Stage 1 development economics, concurrently with work to obtain development approvals and finalise the optimal transport network.
The project area contains a major deposit within 150 kilometres of Perth and adjacent to rail, fitting Radar’s strategy of acquiring projects that can be brought into production in the near term for low capital cost.
Radar's new landholdings cover 501 square kilometres and include the Yerecoin Project which holds a JORC Inferred resource of 404 million tonnes of iron.
Yerecoin ores require only a coarse grind, and simple processing produces a concentrate grade of over 68% iron with low impurities.
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