Oversubscribed $1.28m rights issue highlights interest in Magnetite’s Razorback project
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Special Report: With an oversubscribed $1.28m rights issue under its belt, Magnetite Mines is poised to progress development of its 4 billion tonne Razorback iron ore mine.
Strong support from shareholders, directors and new investors amidst a market impacted by the COVID-19 pandemic allowed the company to raise more than the $1.2m it was seeking to commence pre-feasibility study works.
Magnetite Mines (ASX:MGT) said strong support from existing shareholders and new investors for the initial rights issue resulted in the receipt of $857,637 worth of valid entitlements for shares, or a 71 per cent take-up of the 0.1 cent per share offer.
Its subsequent offer of shortfall shares to existing shareholders received a warm welcome, leading the company to undertake an additional private placement to unrelated sophisticated investors to raise an additional $75,000, bringing the total raised to $1.28m.
The successful rights issue comes less than a week after the company received a non-binding indicative farm-in proposal that, if finalised, would see RFC Ambrian Group-founded Braemar Mining Developments (BMD) acquire a stake in the Razorback mine in South Australia
RFC Ambrian, a leading independent adviser and investor in global natural resources, had proposed that BMD take a stake of up to 49.9 per cent and possibly up to 70 per cent of Razorback, which could provide a pathway to production.
Chairman Peter Schubert says the support for the rights issue is an endorsement of the company and its strategy.
He added that the company will now continue negotiating the BMD farm-in proposal, which could “provide a positive development pathway and the funding for completion of the pre-feasibility study and definitive feasibility study on the project.”
Razorback has the potential to be a lower-cost development compared to other mines thanks to the low stripping ratios, the softness of the rock that is much easier to process compared to other magnetite mines – particularly those in Western Australia that tend to be harder rock, and the lower cost of grid-generated electricity on the east coast.
It also benefits from its close proximity to rail, port and power infrastructure and access to enough water to sustain a wet processing operation.
Magnetite Mines also plans to use the CSIRO-developed magnetic resonance (MR) ore sorting technology that promises to make it simpler to sort out the higher-grade material.
This could significantly lower the cost of processing while delivering a higher head grade to the concentrator with lab tests indicating that grades of nearly 70 per cent are possible.