17/12/2008 - 12:27

FIRB approves Mt Gibson's $162m raising

17/12/2008 - 12:27

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Shares in Mount Gibson Iron have jumped 40 per cent on the government's approval for two Chinese companies to subscribe and underwrite a $162.5 million capital raising.

Shares in Mount Gibson Iron have jumped 40 per cent on the government's approval for two Chinese companies to subscribe and underwrite a $162.5 million capital raising.

The Foreign Investment Review Board gave approval for APAC Resources and Shougang Concord to participate in a rights issue and share placement that seeks to raise $96.5 million and $66 million respectively.

APAC has received approval to underwrite the one-for-five rights issue up to the first 82.9 million shares not subscribed to by shareholders, and take its full entitlement of 32.83 million shares.

Shougang will underwrite the balance of the rights issue up to a maximum of 50 million shares and subscribe to 110 million shares in the placement, priced at 60 cents each.

"We are very pleased that the condition precedent in relation to FIRB approval for the underwriting and placement has now been satisfied," Mount Gibson managing director Luke Tonkin said.

"FIRB approval was a key condition to the implementation of the transaction with APAC and Shougang Concord. Mount Gibson shareholders will now vote on the transaction at the Mount Gibson shareholder meeting on 30 December 2008."

Depending on the take up of the rights issue by shareholders, APAC and Shougang could hold up to a 40.46 per cent stake in Mount Gibson.

News of the approval boosted Mount Gibson's share price by 40 per cent or 10c to close at 35c.

Last month Mount Gibson entered into a rescue plan with APAC and Shougang, with the Chinese companies agreeing to buy iron ore from the miner at a substantial discount to current benchmark iron ore prices.

The long-term off-take agreements for Mount Gibson's Tallering Peak and Extension Hill operations have already been executed.

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