Pilbara iron ore explorer FerrAus Ltd has become the latest resource company to attract the interest of China, with mining and smelting company Western Mining Co Ltd to take a 10 per cent stake.
The move marks the first time the Chinese company, listed on the Shanghai Stock Exchange with a market capitalisation of around $9 billion, has taken an interest in iron projects in Australia.
The share placement is priced at $1.15 per share and the number of shares to be issued to WMC will be between 1.5 million and 15.8 million.
The subscription agreement is up for approval by both Australian and Chinese regulatory bodies and will also need the approval of FerrAus shareholders.
Adelaide-based FerrAus has wholly owned licences covering a new iron ore sub-province in the East Pilbara region.
Current resources of iron ore stand at 43 million tonnes.
Full announcement below:
The Board of Ferraus Ltd has reached agreement with leading Chinese mining house, Western Mining Co. Ltd (WMC) for WMC to take a ten per cent placement in FerrAus. A Share Subscription Agreement
(Subscription Agreement) between the companies has been executed that provides
the terms and conditions of the contemplated share placement to WMC
Under the Subscription Agreement which is subject to Australian and Chinese
regulatory approvals and FerrAus shareholder approval, WMC or a related entity will
take a placement of FerrAus shares equivalent to ten per cent of FerrAus' expanded share
capital at the time of issue. The pricing of the placement is $1.15 per share. The
number of shares to be issued to WMC will be in the range of 13,530,000 to
A notice of meeting of FerrAus shareholders, at which approval will be sought for the
proposed share placement to WMC, will be distributed in due course.
FerrAus Chairman John Nyvlt states that "Ferraus welcomes WMC's first investment
in ferrous raw materials resource projects in Australia. Members of FerrAus and
WMC management teams have known each other for a long time and share common
visions on business development. The support of a major mining house is a big plus
to FerrAus' project development plans."
WMC Chairman Mao Xiaobing has noted that "FerrAus represents a great
opportunity for WMC as I am comfortable with the company's management team and
excited about the exploration and development potential of their iron, manganese
and nickel projects."