IronClad Mining and Trafford Resources secure Chinese funding for iron ore project

IronClad Mining (ASX: IFE) and Trafford Resources (ASX: TRF), participants in the Wilcherry Hill iron ore joint venture, have signed an agreement with MCCM Capital Management Co. Ltd. whereby MCMC can earn a 50% interest in Stage One of the Wilcherry Hill Project in South Australia by spending AUD$35 Million.
The company will also place a total of 4,400,000 shares to MCMC. MCMC's funding will be drawn from the capital of a mining fund sourced from Asia-Pacific institutional investors and Chinese private steel enterprises.
The deal provides for a total of 120 days for MCMC, IFE and TRF to enter into a Stage One Joint Venture Agreement.
Upon completion of MCMC's expenditure, the Stage 1 Joint Venture will be MCMC = 50%, IFE = 30%, TRF = 20%. IronClad retains 80% of the remainder of the Wilcherry Hill and Hercules projects.
The formal agreement is subject to IFE shareholder approval as well as the normal Australian and Chinese regulatory approvals.
The first tranche of 2,200,000 shares at $1.50 each to raise an initial $3,300,000 is subject to a maximum 14 day due diligence period which commenced on 19th April 2010.
Last sale for IronClad was $1.60.
While the second tranche, also of 2,200,000 shares, will be issued upon MCMC and IFE entering into a Share Subscription Agreement that will be dated 50 days after 19th April 2010.
MCMC will have the right to appoint a director to the Board of IFE.
The funds will be applied to the cost of the Bankable Feasibility Study currently being undertaken by the company on its high quality, skarn, crystalline magnetite iron ore project at Wilcherry Hill in South Australia.
Subject to a successful feasibility report, the first stage of the project is due to commence with the export of direct shipping magnetite ore (DSO) towards the end of the year.
The MOU provides for a total of 120 days for MCMC, IFE and TRF to enter into a Stage One Joint Venture Agreement.
Stage One of the Wilcherry Hill Project will produce high quality, low containment Direct Shipping Ore (DSO) which is also the highest value iron ore to steel makers.
Ironclad anticipates that Stage One, which is being fast tracked into production by the end of 2010, will deliver up to two million tonnes a year for at least three years of DSO ore.
In February IronClad also signed an MOU with Liuzhou Iron and Steel Co Ltd of China for the sale of up to one million tonnes of Wilcherry Hill DSO a year with the delivery time to be mutually agreed and, and with prices to take account of prevailing market conditions.
Ironclad said delivery of this high value product during the current period of very strong demand is expected to provide the current Wilcherry Hill Joint Venture with a strong cash flow to assist in the funding of Stages Two and Three of the project.


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