Magnetite Mines undertaking rights issue to raise $6.2 million to support Razorback Project | ASX:MGT (proactiveinvestors.com.au)

Magnetite Mines Ltd (ASX:MGT) is undertaking a three-for-11 renounceable rights issue at $0.30 per share to raise up to $6.2 million before costs.

The raise comes as the company seeks to optimise the size of the Razorback Project in South Australia to at least five million tonnes per year. It plans to use the funds raised to finalise and lodge the mining lease proposal, support the advancement of value engineering work, and contribute to the repayment of the Mintech convertible note, and for general working capital.

Magnetite chair Jim McKerlie said: “The decision to optimise the size of the Razorback Project to at least five million tonnes per year output is proving to be the right one given the new global economic and market conditions. The forecast demand for DR-grade iron ore far outweighs the anticipated supply as the steel industry strives to reach its decarbonisation targets.

“The work that has been undertaken at Razorback indicates a project value in multiples of our current market cap and the board believes that this represents an excellent opportunity for shareholders.

“The board appreciates it has not been happy times for shareholders recently but we want to assure you that the value creation in the underlying project has been significant and we need to complete the feasibility studies to realise the full value of your company.

“This capital raise is prudent in terms of capital management and gives all shareholders an opportunity to take shares at an attractive price with a generous option included.

“Finally, I advise that all directors, the CEO and CFO are participating in the offer. We all believe in this project and are using all of our experience to ensure project success.”

Premium-grade iron ore key to green iron future

Magnetite CEO Tim Dobson said: “Strategic partner interest has never been stronger in our Razorback Iron Ore Project and this has aligned with the South Australian government currently establishing a new ‘green steel’ strategy to take full advantage of the state’s renewable energy and emerging green hydrogen credentials.

“Our premium-grade iron ore concentrates will be a key supply source into that green iron future for the state and global steel players.

“The proceeds from this offer (net of costs) will go directly towards the completion of our mining lease proposal for Razorback, as well as completing value engineering studies designed to reduce capital and operating costs prior to locking down the final Definitive Feasibility Study scope.”

Renounceable rights issue

Magnetite Mines Ltd (ASX:MGT) is undertaking a three for 11 renounceable rights issue at $0.30 per share to raise up to $6.2 million before costs. For every two new shares subscribed under the rights issue, eligible shareholders will receive one free attaching option with an exercise price of $0.45 and expiring 18 months from issue date.

The $0.30 issue price represents a discount of:

• 25.9% to the company’s last closing price of $0.405 per share on the ASX; and
• 22.4% to the company’s 15-day VWAP on ASX of $0.386 per share.

The rights issue is open to all eligible shareholders who are registered shareholders with a registered address within Australia or New Zealand as at 7.00pm (AEDT) on Tuesday, October 31, 2023.

The rights issue will open on Thursday, 2 November 2023 and close at 5.00pm on Thursday, 16 November 2023, and eligible shareholders can apply for additional shares in the shortfall in excess of their entitlement. The board reserves the right to place any shortfall shares remaining within three months of the closing date.

All Magnetite Mines directors, CEO and CFO intend to participate in full or in part in the rights issue.

All new shares issued will rank equally with existing shares on issue and the company will apply for quotation of the new shares and the attaching options on ASX.