Emerging Western Australian iron ore producer Territory Iron Ltd is to raise $12.6 million before issue costs to fund the development of its Francis Creek Iron Ore Mine in the Northern Territory.
The placement of 35 million shares at 36 cents each will be placed, subject to shareholder approval, to institutional and sophisticated clients of Euroz Securities Ltd.
Earlier this month, Territory signed an agreement with a Chinese steel mill for most of the Frances Creek 2007 iron ore production.
The undisclosed Chinese customer has agreed to purchase between 600,000 and 800,000 tonnes of iron ore.
The Frances Creek iron ore mine is located 190 kilometres south of Darwin and is expected to commence production in early 2007 building up to an annual output of approximately 1.5 million tonnes.
In early morning trade, shares in Territory were down 1.5 cents to 40.5 cents.
Below is the full announcement:
PLACEMENT TO FUND NEW IRON ORE DEVELOPMENT
Territory Iron Limited is pleased to announce the placement of 35 million shares at 36 cents each (to raise $12.6 million before issue costs) to fund the development of its Francis Creek Iron Ore Mine in the Northern Territory.
The shares will be placed, subject to shareholder approval, to institutional and sophisticated clients of Euroz Securities Limited. Fifteen million of the shares will be placed under the Company's 15% placing capacity, with the balance of 20 million shares subject to the approval of shareholders at a meeting primarily called for that purpose. A Notice of Meeting will be dispatched to shareholders shortly, with the meeting expected to be held on 23 May 2006.
With existing cash reserves and a small amount of off-balance-sheet lease financing now being negotiated, the Company expects to be fully financed to production, scheduled for early next year. Total development costs are expected to be approximately$15 million, with contingencies.
