Special Report: Magnetite Mines is raising up $5.65m through a rights issue to accelerate pre-feasibility work on its 4-billion-tonne Razorback iron ore mine in South Australia.

The rights issue for existing shareholders is partially underwritten by Mahe Capital to the tune of $4m, which company director Mark Eames says gives shareholders some extra surety that the funds will be raised.

Eligible shareholders of Magnetite Mines (ASX:MGT) will be offered the opportunity to acquire one new MGT share priced at 1c, or a 27 per cent discount to the 10-day volume weighted average price, for every four shares that they hold.

Additionally, one free attaching option exercisable at 5c and expiring on October 29, 2021, will be issue for every two shares subscribed.

All directors in the company have already flagged that they will participate in the 1 for 4 renounceable rights issue.

Eames told Stockhead that while there were other ways that the company could have raised funds, such as a share placement or looking for a strategic partner, it chose to give shareholders a chance to participate in the potential growth story.

“Even though it’s a little bit slower than some other means, we’ve actually given the opportunity to existing shareholders to participate,” he said.

The rights issue closes on September 29.

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