Australian iron ore developer United Minerals yesterday agreed on a $27.2 million share placement with China Railway Materials (CRM), which the company hopes will boost its Railway Iron Ore Deposit in the Pilbara, Western Australia.
Under the terms of the placement, a 10-year three million tonnes per annum off-take agreement must be finalised before the placement can commence.
United will issue CRM with 20 million fully-paid ordinary shares at $1.35 per share, along with two million attaching options at 10 cents each with an $1.35 exercise price and a 30 September 2011 expiry date.
After the placement, CRM will hold approximately 11.38% of the company’s issued capital.
According to United Minerals chief executive Matthew Hogan, the funds and the important relationship with CRM will both go a long way to advancing the Railway Iron Ore Deposit towards production
“We welcome the deal with CRM and look forward to working with them as a strategic shareholder in bringing this outstanding deposit to commercialisation,” he said.
“The long term off-take agreement will materially assist the financing of the project.
“Clearly, given their infrastructure capabilities, CRM may be involved in infrastructure solutions to assist commercialisation.”
The agreement is subject to satisfactory due diligence, approval from the foreign investment authorities of the Australian and Chinese Governments and the signing of the off-take sales agreement.
The conditions must be satisfied by 7 December 2009.