The deal reflects the confidence of institutional investors in MGT’s development strategy at its high-grade Razorback iron ore project. Image: Getty
Mining
The deal reflects the confidence of institutional investors in MGT’s development strategy at its high-grade Razorback iron ore project.
Magnetite Mines (ASX:MGT) will push towards the next phase of development at its high-grade Razorback iron ore project, after announcing a major new capital raise this morning.
The company confirmed it’s received binding commitments from two new institutional investors, to raise up to $7m via share placement.
The round will be issued at 5.8c per share, which marks a premium of over five per cent to MGT’s closing price yesterday.
The price premium reflects the level of institutional investor interest in Magnetite’s strategy, amid broader tailwinds for the iron ore sector.
Magnetite CEO Peter Schubert highlighted that the placement brings two new institutions onto the share register, both of which have significant experience in the resources sector.
Spot iron ore prices for benchmark 62% fines hit a new record above $US200/tonne this week, as the market consolidates at decade-highs.
In that context, Magnetite’s highly regarded management team is executing on a details-oriented approach as it looks to become South Australia’s next iron ore producer.
Earlier this week, MGT advised the market that it remains on track to deliver an extensive pre-feasibility study for the Razorback project before the end of the June quarter.
And speaking with Stockhead, Schubert said today’s share placement shows major investors share the same vision as the project moves towards production.
“Institutional involvement is a big next step, and a vote of confidence in what we are all committed to — becoming South Australia’s next iron ore producer,” Schubert said.
The funds raised will be used to advance the next phase of research studies at Razorback, as well as general working capital.
Given the direct industry experience of MGT’s two new investors, Schubert added that he believed the placement will be value-accretive for the existing shareholders who have supported the company to this point.
As well as bringing sophisticated investors onto the register, Schubert said the extra capital also “underpins the financial position of the business, and increases the funds available for the company’s exciting development programme”.
“We believe this placement, which is modest in proportion to the company’s market capitalisation, has considerable longer-term benefits for all shareholders,” he said.
This article was developed in collaboration with Magnetite Mines, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
