Ironveld (AIM:IRON) (“the Company”) is the owner of a High Purity Iron, Vanadium and Titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province South Africa (“the Project”). Ironveld is currently seeking to raise £2.1million through the issue of 105,000,000 shares at 2p per share (“the Placing”). The Placing comprises a Firm Placing of £1.4million and a Conditional Placing of £0.7million, which is subject to shareholder approval at a General Meeting of the Company on 10 July 2017.
A total of £100,000 worth of new ordinary shares (5,000,000 new ordinary shares) in Ironveld, priced at 2p per share, will be made available to onboarded users of the Teathers App. These shares constitute part of the Firm Placing and dealing will commence on the settlement date of 26 June 2017. This deal will be open on the Teathers App from 2000 on Wednesday 21 June and will close at 1700 on Friday 23 June. Contract notes will be issued on completion of the deal.
Ironveld will use the funds of the placing to repay existing debt and to progress the planned acquisition of the 7.5MW Smelting Plant, (“the planned acquisition”) described below.
Ironveld expects to mine its own VTM ore as feedstock for a 7.5MW DC smelter which will produce speciality iron products including high purity iron powder as well as vanadium and titanium slag products.
The Definitive Feasibility Study published in April 2014 confirms the project’s viability to deliver an exceptionally high-grade iron product (99.5% Fe) called High Purity Iron which commands a premium in the market place. High Purity Iron Powder is widely used in powder metallurgy, in magnetic materials and in manufacturing of welding rods. Vanadium and Titanium slag containing commercial grades of vanadium and titanium will also be produced and sold. Vanadium has historically been used as ferrovanadium or as a steel additive adding a considerable increase of strength to steel. However it is the development of vanadium redox flow battery systems for grid energy storage applications that has the most potential to have a significant impact on future vanadium demand. Titanium Slag is an upgraded white pigment that is used in the manufacture of paint, paper and plastics.
The Company has recently been informed by Sylvania Platinum that the mining license for heavy minerals, iron and vanadium for Pan Palladium (Pty) has been granted by the Department of Mineral Resources.
Further, Ironveld has also announced the planned acquisition of a smelting business, which owns three arc furnaces and two inductions furnaces, a converted and associated equipment with a smelting capacity of 7.5 MW. If this truncation completes it will to enable Ironveld to commence early production of HPI, Vanadium and Titanium from the Project and will facilitate supply into the Company’s offtake agreements. The transaction will provide the Company with a ready-made smelter that is expected to deliver highly attractive economic returns and early free cash flow whilst providing the platform for organic growth. The Smelting Plant and IPP are located in Middleburg, South Africa, c. 300 kilometres from the Project. Ironveld is currently in discussions with the International Development Corporation to secure a project-level debt-funding package to enable it to complete the planned acquisition.
Non-Executive Chairman Giles Clarke has agreed to acquire 2,000,000 shares in the Placing for £40,0000 and Non-Executive Director Nick Harrison has agreed to acquire 250,000 shares in the Placing for £5,000.
Stock specific risks
- The company will be subject to typical mining production, exploration and development risks. There is no guarantee the company will be able to define economically viable resources.
- Any delay to the development timeline would disappoint the market and sentiment towards the shares.
- Commodity prices will fluctuate, which could affect the economic feasibility of the project.
- Ironveld’s acquisition of the smelter is currently contingent upon securing a project debt funding package from the International Development Corporation. Should the Company fail to secure this debt facility it will be forced to search for alternative financing, which there can be no guarantee will sourced.
If you are buying outside of normal market size then this may prevent you from selling the shares at market price.