South Australian-focussed miner, IronClad Mining (ASX:IFE) will raise $7.5 million via a rights issue to commence an early works program and to finalise a Definitive Feasibility Study on its Wilcherry Hill Iron Ore Project in South Australia.
The renounceable rights issue will be pitched at $0.85 per share on the basis of one new share for every five shares held in the Company. Last sale price for IronClad was $0.96.
Trafford Resources Limited (ASX: TRF), which owns 50% of the current 44 million issued shares in IronClad, intends to participate fully in the funding on the same basis as all other shareholders.
The rights issue will aim to bring Stage One of the three stage development into production.
With this, long lead time items can be secured, maintaining IronClad’s fast track approach to production. It will also allow the early start up of the planned test pitting programme, designed to hone eventual extraction techniques.
Shareholders of IronClad had expressed the desire to have a higher level of investment in the project, when the Company announced its intention to negotiate with China based MCCM Capital Management Co. Ltd for a 50% share in the Phase One Development by the expenditure of $35 million.
The project has forecast high rates of return from development due to the quality of the product likely to be produced from Wilcherry. International companies and institutions (including MCCM Capital Management Co. Ltd) said they are interested in the Wilcherry Hill Project because of the exceptional product but require clarity on Australia’s future resources tax regime before they can commit funds.
Stage 1 will aim to produce a high quality, low contaminant Direct Shipping Ore (DSO) 62% Fe product which, can be produced by simple low cost, dry methods such as crushing, screening and dry magnetic separation. It is expected that Stage 1(a), which is being fast-tracked into production by the end of this year, is likely to deliver up to two million tonnes a year of DSO ore for at least three years.