Amur Minerals Corporation (LON:AMC) has raised £6.1mln (US$7.97mln) via a share placing alongside a deal to gain an interest in the Roper Bar iron ore project, in Australia’s Northern Territory.
Some US$3.26mln of the placing proceeds will be used to fund the continuing development of the Kun Manie nickel-copper project.
The share placing will see Amur issue 348.5mln new shares, priced at 1.75p each.
Through Carlo Holdings Limited (CHL), a recently incorporated company being acquired by Amur for a nominal £1.00, proceeds from the placing will be used to subscribe for US$4.67mln convertible loan notes in Nathan River Resources which owns Roper Bar.
The notes carry interest at a coupon of 14% and convert into shares equivalent to 19% of Nathan River’s present issued share capital.
Roper Bar is host to an estimated 446mln tonnes of JORC resources with an iron grade of 39.9% and presently 4.76mln tonnes of JORC reserves at 60.1% iron.
Some 194,000 tonnes of direct shipping ore (DSO) stockpile is presently available for shipping from October, Amur highlighted.
The AIM-quoted company noted that Roper Bar is set for a rapid restart of mining operations without the need for significant processing and benefits from previously constructed ‘pit-to-port’ infrastructure.
Glencore has been involved in the project and has entered into an offtake deal with NRR Trading, a trading company established in Singapore by Nathan River. CHL and Glencore are each entitled to a seat on the boards of Nathan River and Australian holdings company NRR Group.
"Rarely do opportunities avail themselves where very near-term accretive value and cashflows are available to a mineral resource company,” Amur chief executive Robin Young said in a statement.
“Our due diligence has confirmed that there are several positive components that offer such upside potential. Key to the successful restart of the Roper Bar Project, Nathan River Resource's management team is highly experienced in iron ore production.”
Young added: "(The) current near-production status allows for a rapid resumption of the production and shipping of Direct Shipping Ore as substantial stockpiles of high-quality iron ore are currently ready for loading and transport to the Chinese market.
“The long-term offtake agreement with Glencore, one of the world's largest global diversified natural resource companies provides us with security by having a partner of substantial import."
Adam Habib, advisor to Amur and who has also been working with Glencore in regards to Roper Bar, meanwhile, described it as a “potentially transformational investment opportunity”.
He added: “Iron ore has been performing very well with demand out of China expected to remain strong as continued stimulus measures are taken by the Chinese and other governments."