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Magnetite Mines (ASX:MGT) taps investors for $7M to fund Razorback work, SA
Source: Magnetite Mines
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  • Shares in Magnetite Mines (MGT) have opened strong today as the company announces plans to tap investors for $7 million through a share placement
  • The company will raise the funds by placing almost 121 million shares to institutional and sophisticated investors at 5.8 cents each
  • This price represents a neat 2 per cent premium to Magnetite's five-day volume-weighted average price leading up to May 5
  • The company said it plans to use the new funds to progress important work at its flagship Razorback iron ore project in South Australia
  • This includes a pre-feasibility study (PFS) for the project, which Magnetite said is on track for delivery before the end of the 2021 financial year
  • According to Magnetite's latest financial report, the company had around $4.16 million worth of available cash on March 31, 2021
  • Shares in Magnetite Mines have spiked to over the placement price this morning, up 10.91 per cent to 6.1 cents each

Shares in Magnetite Mines (MGT) have opened strong today as the company announces plans to tap investors for $7 million through a share placement.

The junior iron ore miner said today it has received binding commitments from sophisticated and institutional investors to raise the funds by issuing almost 121 million shares at 5.8 cents each.

This issue price represents a neat 2 per cent premium to Magnetite's five-day volume-weighted average price leading up to May 5.

Magnetite said the funds will be used to keep progressing its flagship Razorback iron ore project in South Australia.

News of the placement comes not long after Magnetite told shareholders it was on track to deliver a pre-feasibility study (PFS) for the Razorback project by the end of the 2021 financial year, with key PFS infrastructure collaborators engaged over the March 2021 quarter.

At the same time, the company said it is busy updating the resource estimate for the project based on recent geological modelling and analyses of historical core samples.

As such, the proceeds from the $7 million placement will go towards advancing the studies and other Razorback work, alongside some general working capital.

Magnetite Chairman Peter Schubert said the investment from the new institutions is a demonstration of confidence in the company and its Razorback project.

"We believe that this placement, which is modest in proportion to the company's market capitalisation, has considerable longer-term benefits for all shareholders," Peter said.

"It brings sophisticated and institutional investors on to our register, which is a positive development as we move the Razorback iron ore project forward, it underpins the financial position of the business and it increases the funds available for the company's exciting development programme," he explained.

"Most importantly, it provides a firm financial foundation for your company as we work towards completing the PFS, which is due by the end of the first half of this year."

According to Magnetite's latest financial report, the company had around $4.16 million worth of available cash on March 31, 2021.

Shares in Magnetite Mines have spiked to over the placement price this morning, up 10.91 per cent at 10:08 am AEST to 6.1 cents each. The company has a $164 million market cap.

MGT by the numbers
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