Cazaly to raise $4m in Chinese placement

Cazaly Resources will raise $4 million through a private deal with an unnamed Chinese company, as it looks to advance Parker Range iron ore project in the Yilgarn region.

The iron ore explorer said it will place 10 million shares at 40 cents each and 5 million free standing options to the privately-owned Chinese company, which has annual revenue of more than $100 million.

Cazaly said the company has close commercial relationships with several mid to large sized steel mills in China.

"The funds raised under this placement are intended to be used primarily to advance the Company's Parker Range iron ore project and for the further exploration over the Company's various Iron Ore projects and for working capital purposes," the company said.

Last month, Cazaly appointed engineering firm Lycopodium to carry out the prefeasibility study at Parker Range.

Cazaly is aiming to have the project in production by mid-2011.

The placement is subject to shareholder approval.

Shares in Cazaly were up two cents at 31c at 12:47 AEST.