Leederville-based Fox Resources Ltd has raised $10 million through a placement to fund the company's return to nickel production, having also signed an offtake agreement with China's Jinping HengHao Non-Ferrous Metals Ltd.
Leederville-based Fox Resources Ltd has raised $10 million through a placement to fund the company's return to nickel production, having also signed an offtake agreement with China's Jinping HengHao Non-Ferrous Metals Ltd.
The full text of a company announcement is pasted below
Fox Resources Ltd today announced that it has completed a placement of 8 million shares to raise $10 million.
Proceeds from the placement will predominantly be used to underpin Fox's return to nickel production in the 2nd quarter of 2007, as the company transitions from a successful explorer to an emerging regional nickel producer and base metals producer. In addition, funds will be utilised to prove up additional reserves through ongoing exploration and the appraisal of previously identified base metal VTEM targets (Figure 1).
In particular, funds raised together with Fox's existing cash flow from current production will:
- Provide development funding for its nickel projects (Radio Hill, Sholl B2, Razerline, Ruthwell) within 15km radius of the Radio Hill processing plant
- Contribute towards the development of its five new base metal VTEM targets (Sunchaser, Conquest, Bertram, Carver and Zodiac) within a 15km radius of the recently acquired Elizabeth Hill processing plant
- Provide funding for the newly acquired skid mounted ball mill to upgrade the Radio Hill milling capacity to enable additional throughput and increased recovery rates for nickel production
The balance of funds raised will be utilised for ongoing intensive exploration programs in the region and for general working capital purposes.
Fox's copper and zinc production operations are currently based at Radio Hill, processing near-surface ore from its West Whundo copper-zinc mine. The plan is to mine the open pit down to a depth of 45 metres and gear up for a return to nickel production in the 2nd quarter of 2007.
Commenting on the current exploration program and associated capital raising, Fox's Managing Director, Mr Don Harper, said, "The injection of capital positions us very well for the future - we are embracing a strengthening nickel price and accelerating our strategy to build a nickel business around Radio Hill and a base metals business at Elizabeth Hill."
"We are very pleased with the outstanding institutional interest in our placement which endorses our new nickel strategy and the work completed by our team to date," he said.
"It's a new Radio Hill - the plant now has the float capacity and will soon have additional milling capacity to capitalise on better recovery rates and on the strong commodity prices that wasn't available to us 8 months ago.
The shares were placed by Tricom Equities to professional and sophisticated investors. The issue price was $1.25 per share.
FOX STRIKES NEW NICKEL OFFTAKE AGREEMENT
The Company is also pleased to advise that it has entered into an agreement with China's largest privately owned nickel concern, Jinping HengHao Non-Ferrous Metals Ltd for the sale of nickel-in-concentrates that will be produced from Fox's new Sholl B2 nickel deposit in the Pilbara, Western Australia.
Yunnan Tong Chang Long Industrial Trading Co., Ltd, the trading arm of Jinping has expressed a desire to provide financial support to the project so as to deliver maximum production as rapidly as possible.
YNTCL is planning to increase their current production by five times in the next five years and believes the supplies from Fox should fit well into this program.
Mr Zhu, Chairman of Jinping, said the offtake agreement with Fox is mutually beneficial.
"We will be looking to take equity in this young and dynamic company which clearly demonstrates our commitment and confidence in Fox Resources," said Mr Zhu. "We are taking a long term view in this transaction and looking forward to a bright and profitable future for both of us."
Mr Zhu went on to say that Fox satisfied every criteria of a stringent profile the head office specified.
Fox still maintains a strong and growing relationship with Jinchuan Group and is pleased to have such strong support from China feeding its aggressive growth strategy.