19/03/2012 - 11:30

Kiwi investor backs Forge's Balla Balla plan

19/03/2012 - 11:30

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Kiwi investor backs Forge's Balla Balla plan

Forge Resources shares have jumped after it announced it had lined up $50 million in funding and signed a joint venture partner for its Balla Balla iron ore project near the Pilbara coast.

Private New Zealand company Todd Corporation, through its Todd Capital subsidiary, will support the purchase of Balla Balla, currently owned by Atlas Iron, and its subsequent exploration and development.

Todd will kick in $45.5 million in three forms - it will become a joint venture partner by acquiring a 25 per cent stake in the project for $10 million; subscribe for $8 million of Forge Resources shares at 50 cents per share; and provide a $27.5 million project finance facility.

Forge Resources stocks were up 12.5 per cent at 11:20AM WST, trading at 45 cents.

Forge also said today it had received commitments from sophisticated and institutional investors to kick in a further $4.5 million, also at 50 cents per share.

Forge will be responsible for marketing the magnetite and titanium concentrate products from the joint venture.

The transactions remain subject to Foreign Investment Review Board and Forge shareholder approval.

Forge managing director Matthew James said the transactions would allow Forge to complete the purchase of Balla Balla from Atlas Iron, and provide additional working capital to advance it and the company’s Eucla West mineral sands project.

“This investment package represents both a strong vote of confidence in the acquisition of the Balla Balla project, which will be the company’s flagship asset, as well as the company’s ability to develop a significant resources business under the stewardship of our chairman, Mr Nicholas Curtis,” Dr James said.

The $40 million acquisition of Balla Balla was first announced in December last year.

Forge announced late last month that its first $17.5 million payment, due by the end of February, would be delayed due to protracted negotiations over financing arrangements.

Atlas agreed to extend the due date until April 30 in return for a non-refundable deposit of $500,000.

 

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