Grange Resources has announced plans to raise $167 million through a heavily discounted entitlement issue and placement.
The capital raising will include an underwritten one-for-one non-renounceable entitlement issue of 495 million shares at $0.25 a share to raise $124 million and placements to Grange’s major shareholders at $0.29 a share to raise a further $29 million.
Grange shares traded yesterday at $0.49.
The company said the money is intended to go towards paying down debt and providing it with capital for its Savage River operations and the development of its Southdown magnetite project in Western Australia.
“The restructure initiatives supported by the raisings, as well as additional working capital, allow us to position the company and its balance sheet correctly for the current financial climate,” Grange managing director Russell Clark said.
Clark said that the funds will also put the company in a position to take advantage of the improving iron ore market.
“We believe future iron ore price fundamentals are very promising,” he said.
“The support of our major shareholders, who include China’s largest privately owned steel mill and significant operators in the Chinese iron ore market, represents a strong vote of confidence in the future of Grange and the iron ore market.”