Iron ore miner Northern Iron has seen the Singapore based, ASX listed OM Holdings take a 10% stake for $41 million.
The Norway focused iron ore miner, Northern, will place 28.25 million shares to OM at $1.45 per share. The chief executive officer of OM Holdings, Peter Toth, will also take a seat on Northern Iron’s board.
OM said it believes Northern’s Sydvaranger magnetite iron ore mine in Norway has the potential to be a long life mine.
OM Holdings said the investment in Northern is part of a strategy to diversify its commodity base, adding that Northern will benefit from OM’s experience in mine development.
The funds for the stake will be initially raised via existing cash, with OM looking at additional financing options to more effectively gear the acquisition.
Northern Iron had previously reported production issues at its Sydvaranger mine, which affected the quality and level of output for its concentrates and its ability to effectively ramp up operations. It will use the funds raised to pay for capital rectification at the magnetite mine.
Following this is the announcement that Northern Iron’s chairman Neil Hamilton will leave the company. Hamilton commented on OM Holdings “marketing knowledge of bulk commodities in Asia.”
The Singaporean investment company OM also fully owns the Bootu Creek manganese mine, which produced 672 000 tonnes of manganese. The mine is aiming for a production level of 900 000 heading into 2010.