Venture fully funded to deliver iron ore production

Special Report: Venture is on track to start iron ore production in the second quarter with full funding for its wet screening plant and first shipment working capital now secured.

The company has received firm commitments from sophisticated, professional, and institutional investors for a placement of more than 181 million shares priced at 5.5c each to raise $10m.

This fully funds development of its Riley iron ore mine in Tasmania, allowing it to complete the final stages of the wet screening plant construction and commissioning that paves the way for Venture Minerals (ASX:VMS) to deliver its first iron ore shipment.

Importantly, the placement removes the need for the company to fund the plant through debt, which significantly de-risks the project and the potential impact on the company as it transitions from an explorer to a producer.

Riley has immediately accessible ore reserves of 1.6Mt at 57 per cent iron with low impurities and importantly is a direct shipping ore deposit with strip ratios coming up at a big fat zero.

While the reserve translates to a relatively short mine life of two years, iron ore is currently priced at about $US174.07 per tonne, nearly double the $US90/t assumption used in the company’s August 2019 pre-feasibility study.

This is likely to drastically improve the already attractive economics such as an internal rate of return (IRR) of 303 per cent and post-tax net present value (NPV) of $27m along with post tax cash generation of $31m.

Both IRR and NPV are measures of a project’s profitability.

Venture notes that the 2021 outlook for iron ore prices remains strong due to continued demand generated by Chinese government infrastructure spending and ongoing supply concerns from Brazil.

Exploration funding

Funds from the placement will also be used for exploration at the company’s Golden Grove North project in Western Australia where recent drill intersections have returned results of up to 7 per cent zinc, 1.3 per cent copper and 2.1 grams per tonne gold at Orcus and other identified strong electromagnetic conductors along the VMS target zone.

Venture will also use the funds at its Kulin gold project, which is located in the same emerging gold province as the +30 million-ounce Boddington deposit, the 2.2Moz Edna May deposit, the 1.2Moz Katanning deposit and the 700,000oz Tampia project.

It recently kicked off a drill program of at least 3,000m at the project to test multiple targets beneath broad, mineralised trenches that were dug last year.

This article was developed in collaboration with Venture Minerals, 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.