Clive Palmer's Mineralogy has agreed to loan $3 million to Australasian Resources, which will use the funds to progress financing talks over the Balmoral South iron ore project.
The $3 million loan facility is repayable within 12 months, is secured by a fixed and floating charge over Australasian's assets and bears interest at the bank bill swap rate plus 2 per cent, Australasian said in a statement today.
"In the event that Australasian receives proceeds from a capital raising or disposal of asses, such proceeds must be applied to the repayment of the facility," it said.
Australasian added that the talks with potential financiers include end users eager to supply long-term iron ore supply and with access to attractive funding options.
"Australasian will continue to evaluate the potential strategic investors whilst also using the funds to further increase the value of its projects during this process."
Australasian already has final environmental approval for the $2.7 billion Balmoral South project, which it acquired contractual rights from tenement holder, Mineralogy for the mining and processing of one billion tonnes of magnetite iron ore.
The loan agreement comes two months after the Australian Securities Exchange questioned Australasian over its cash reserves, over it burned through $1.8 million through the December quarter, leaving it with $2.3 million at the end of calendar 2009.
Shares in Australasian, which were previously in a trading halt, were up one cent to 47.5c at 12:03 AEST.
