BC Iron taps investors for $25m

Iron ore miner BC Iron has confirmed a $25.5 million capital raising backed by major shareholder Kerry Stokes to fund work at its Buckland project and pay off debt.

BCI will raise the funds by way of a one-for-one renounceable entitlement offer priced at 13 cents per share.

The offer represents a 37.2 per cent discount to the company’s 30 day volume-weighted average price.

BCI major shareholder Kerry Stokes, through his private company Wroxby, has committed to take up his entitlement of $4.9 million, while the remaining $20.6 million has been underwritten by Patersons Securities and Foster Stockbroking.

Out of that, Wroxby has sub-underwritten $11 million, while managing director Alwyn Vorster and non-executive director Martin Bryant have both agreed to sub-underwrite $200,000 and $100,000 respectively.

“BCI is currently transitioning to a new phase, ‘resetting for growth’ and focusing on activities on actively generating value from existing assets while also considering, in a disciplined manner, other new opportunities,” BCI said in a statement.

“The company is seeking to raise funds to support this strategy and also strengthen its balance sheet.”

If the raising is successful, $3 million will be put towards the Buckland iron ore project, while $11.3 million will contribute to evaluating and “potentially transacting” on new opportunities, not necessarily in iron ore.

About $10 million will be used to retire remaining debt obligations.

Earlier this week, BCI sold its majority 75 per cent stake in the Nullagine joint venture project to partner Fortescue Metals Group for $1 and royalty payments.

Shares in BCI were 18.6 per cent lower to 17.5 cents each at 11am.