Wednesday, 15 February 2012

IronClad Mining receives strong investor backing for $3m capital raising

IronClad Mining (ASX: IFE) has raised a further $3 million to fund development of its Wilcherry Hill iron ore project in South Australia.

The funds were raised from the placement of 3.5 million shares at $0.85 each to a number of sophisticated Australian investors.

Importantly, IronClad has the potential to attract further investment as the company becomes the second smaller mining company to move into production in South Australia.

The company could be in line for a further $11 million at the end of March, with options in IronClad likely to be exercised.

Non-executive chairman Ian Finch said the funds from this capital raising, together with other cash the company already has, will be used to pay the South Australian Government’s environmental bond for Wilcherry Hill, which remains on target to commence maiden production in the current March quarter.

“Since a number of the ‘early works’ capital costs have already been spent – including construction of our $5 million accommodation village at nearby Kimba – most of the requirements for Stage One of the project have now been achieved,” he said.

“Debt financing through Australian and international financial institutions is expected to be in place over the next few months.

“This will allow us to fast track the next stage of our project – the designing and construction of the gravity circuit.

“It will also allow us to commence Feasibility Studies on our massive Hercules project, in close proximity to Wilcherry Hill, which is the long term future of the company.”

The $3 million capital raising follows close on the heels of a A$6 million investment in IronClad from Hong Kong-based investor New Page Investments.

The money is being used to finance start-up works at the Wilcherry Hill site, which were scheduled to begin in late January.

Maiden Iron Ore Production

Finch said Stage One of the Wilcherry Hill project is on target to begin maiden production in the current March quarter, with inaugural exports to be achieved in the June quarter of this year.

IronClad is expecting to export about 1 million tonnes in its first full year of production, increasing to 2 million tonnes in its second year.

The first two years of production from Stage One of the Wilcherry Hill project has already been sold to the Chinese steel mills under a comprehensive sales contract and marketing agreement.

A Feasibility Study for Stage One of the project established that, with an average iron ore price of $140 per tonne free on board (net of freight charges) into China and initial operating costs of around $85 per tonne, the project would provide IronClad with margins of $50 per tonne and an operating cash flow of around $80 million per year at full production during the first stage.

Stage Two involves an increase in production to 5 million tonnes of iron ore concentrate per annum

The company is targeting an increase in production to between 10 and 12 million tonnes per annum by 2016.

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