Mindax: Hong Kong's Perpetual Mining to invest $52.3M in Mt Forrest
Mindax Limited (ASX: MDX) has signed a binding agreement with Perpetual Mining Holding Limited (PMHL) of Hong Kong, where PMHL will acquire 51% of Mindax's subsidiary Yilgiron Pty Ltd (YPL) for a consideration of $52.3 million.
YPL will become the joint venture vehicle for the Mt Forrest Iron project.
Mindax today has shown that quality projects can still attract significant investment, even in the current difficult funding markets.
PMHL is an investment company with significant business connections within China, with its stakeholders having experience with iron ore production, and within the iron ore industry in general.
Dr Steve Ward, managing director and chief executive officer for Mindax, commented: "We are delighted to have PMHL as our strategic partner. PMHL and Mindax have worked together very closely over the past few months to finalise this agreement.
"In extraordinary times, we have felt the need to be innovative in planning our future. This agreement secures the way forward for the Mt Forrest Project, provides funding for our other activities, rewards our existing shareholders and creates potential to improve our share trading liquidity.
"We have given each of these matters serious consideration in the past few months and are very pleased with this outcome."
The agreement secures the way forward for the Mt Forrest Iron Project and enables it to be fast tracked towards production, while also providing significant funding for other MDX activities, rewards existing MDX shareholders and creates potential to improve MDX share trading liquidity.
The Mindax and PMHL agreement is subject to satisfactory completion of various conditions precedent and securing regulatory and shareholder approvals.
PMHL will acquire 51% of current Mindax (MDX) subsidiary Yilgiron Pty Ltd (YPL) for a consideration of $52.3 million, with YPL to become the joint venture vehicle for the Mt Forrest Iron project.
The shares will be issued as partially paid. There will be an initial payment of $8,297,000 on subscription. In the initial subscription 82,875,000 shares will be fully paid up.
As to the balance of the subscription price $10 million is to be paid to fund operating expenses and completion of a feasibility study and the balance of the subscription price, $34,049,750 is to be paid in connection with the development of the mine.
Mindax said that it is intended that the partially unpaid shares will be paid up progressively against the above expenditure.
The agreement contains provisions which may require the outstanding subscription price to be paid through a call if certain milestones are not met. If the call is not met then the shares which are not fully paid may ultimately be forfeited.
The feasibility study must be completed by 30 June 2014 or such later date as MDX and PMHL agree and if it is not a call may be made for the balance of the subscription price to be paid.
If Force Majeure delays the completion of the feasibility study,
there may be an extension of time up to 30 June 2015. At that point MDX
and PMHL will discuss the implementation of the project and if another
course of action has not been agreed within 60 days a call may be made
for the balance of the outstanding subscription price.
MDX will issue 25M ordinary shares to PMHL and investors to be introduced by it at 10c per share to give gross proceeds of $2.5M to fund future MDX activities outside of Mt Forrest.
Subject to final advice, MDX proposes to issue 4 bonus ordinary MDX shares for each existing ordinary MDX share to all shareholders for zero consideration.
In securing the $52.3 million from Hong Kong's Perpetual Mining Holding Limited, Mindax has shown that significant amounts of international funding can still be attracted to quality projects - in the current difficult capital markets.
By securing the deal with PMHL, Mindax has not only positioned the Mt Forrest Iron Project to be fast-tracked to production providing cash flows, but also provides funds for other Mindax activities.
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