Northern Uranium (ASX: NTU) is an established Australian exploration company primarily focussed on Uranium and Rare Earth exploration and development in Western Australia and the Northern Territory.
Northern Uranium to raise A$6.6m for Gardiner Tanami Uranium Project
Northern Uranium (ASX: NTU) has announced a renounceable rights issue offering two new shares for every five shares held at a price of 16 cents per share to raise approximately $6.6 million before costs to drive its ongoing uranium and rare earth exploration effort.
The funds raised will be used to fund exploration of the company’s 100%-owned Gardiner-Tanami Project, Gardner Range JV and to provide additional working capital. Drilling is scheduled to commence in early October 2010.
The company also plans to follow up the discoveries of high value heavy rare earths mineralisation at the Browns Range project and commence exploration at the recently acquired John Galt heavy rare earths project.
The rights issue is fully underwritten by Patersons Securities Limited. Northern Uranium will apply for the quotation of new shares on the ASX.
George Bauk, managing director, said “the Board welcomed the renewed market recognition and support for the company and its projects."
"The Board has noted increased interest in the company’s rare earths interests, following the announcement of the execution of a Letter of Intent with Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co., Ltd, an affiliate of East China Exploration & Development Bureau (ECE) on 9 August 2010," he added.
This interest has arisen against the backdrop of firming global prices for rare earths elements and a tightening of export quotas for rare earths by China, which dominates supply.
Having regard to these and other relevant circumstances, the company has formed the view that the rights issue represents a superior alternative for shareholders to the transaction under the letter of intent.
Northern Uranium has notified ECE that it is not prepared to recommend that transaction to shareholders, in its current form. The company intends to continue discussions with ECE in relation to the potential for a revised proposal.
Bauk said the underwritten rights issue would provide the company with the capital needed to drive its exploration programs, and allow it to pursue other development opportunities.
“This rights issue provides an opportunity for shareholders to expand their interest in the company, and to share in what we believe is exciting exploration upside in both our uranium and rare earth prospects,” Bauk said.
“We have a fully funded uranium drilling program in place which we are expecting to commence within the next month, and on completion of the rights issue, we will be in a strong position to pursue further exploration and development opportunities,” he said.
