Cauldron Energy secures $10 million in funding from Chinese backers
Australian uranium exploration and development company Cauldron
Energy (ASX: CXU) plans to undertake extensive exploration activities
across its full suite of uranium assets in Argentina and Australia
after securing
$10M in new funds from strategic Chinese investors.
The investment in Cauldron has been made by Chinese industrialists Qiu Derong and Qiu Dekang, principals of Shanghai Yizhao Investment Group.
Cauldron executive chairman Tony Sage said he believed the investment by these strategic Chinese investors will play a key role towards the Company achieving sustained exploration success in 2010 and beyond.
“We intend to apply the bulk of the A$10M raised to extensive exploration activities across our entire suite of uranium assets, meaning that during 2010 we will have significant drilling activities across our main Australian and Argentinean assets,” Mr Sage said.
Following the announcement, Cauldron shares increased by 4.5c, or 9.5%, to 52c.
Cauldron Energy was created by the merger of two ASX listed companies, Jackson Minerals and Scimitar Resources in 2009.
At the time of the merger the boards of both companies believed the merger was a necessary step to ensure project development was not hampered by a lack of funds.
“The merger of Jackson and Scimitar was proposed as it was evident a combined entity would have a greater
chance of securing required funds for project development than the two companies independently,” Mr Sage
said.
“This significant investment by the Chinese proves the belief of both boards was correct, and the combined
entity is much stronger than Jackson and Scimitar could ever have been individually."
The investment will occur in two tranches.
Under the terms of the agreement, the Convertible Note holders have the right before the repayment date of 31 July 2012 to convert the Note into ordinary shares in Cauldron, subject to the receipt of all necessary regulatory approvals.
The conversion price will be $0.50 with a coupon rate of 10%.
Cauldron has now closed this facility, having raised a total of $9.3M.
The company has also agreed to place a total of approximately 6M shares to the Chinese investors at an
issue price of A$0.50 per share, to raise A$3M, subject to shareholder approval.
There is also a free attaching option to subscribe for Shares on the basis of one option for every three
Shares subscribed for. T
The Options are exercisable at A$0.50 on or before 30 November 2011.
In light of the significant investment by the Chinese investors, Cauldron has appointed Mr Qiu Derong as a non-executive director.
Mr Qiu is a highly experienced industrialist with more than 25 years experience in the architecture, construction,
real estate industries in China and with over 15 years of experience in the management of enterprises and
projects throughout the country.
He has a MBA obtained from the Oxford Commercial College, a joint program operated by Oxford University in
China.
Mr Qiu is currently an executive chairman of Shanghai Yizhao Investment Group Tianjin Yizhao Investment Group and Panda Investment in U.S.A.
Since 2007 Mr Qiu has successfully invested in a range of projects and companies with exploration and mining assets throughout China, including those with exposure to copper, gold, coal and iron ore.
The investment into Cauldron is the first by Mr Qiu into an Australian resources company.
Cauldron controls over 17,000 sq km of uranium prospective tenements across three states in Australia and
large projects with defined uranium mineralisation in Argentina.
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