31/08/2009 - 15:49

Northern Iron to raise $61m

31/08/2009 - 15:49

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West Perth-based Northern Iron plans to raise $61.4 million through a rights issue and has selected a new chief executive following a cost blowout at its iron ore project in Norway.

West Perth-based Northern Iron plans to raise $61.4 million through a rights issue and has selected a new chief executive following a cost blowout at its iron ore project in Norway.

The company today launched a one-for-five pro-rata accelerated non-renounceable entitlement offer, with shares priced at $1.45 each.

Shares in Northern Road closed down 23 cents to $1.64 today.

In a separate statement issued later this afternoon, the company said it had successfully completed the institutional component of the offer, with $55.9 million raised.

The institutional rights offer was underwritten by Euroz Securities, Macquarie Capital Advisers and RBC Capital Markets.

The retail component of the offer is expected to raise a further $5.5 million. The offer is underwritten by Euroz and Macquarie.

Northern Iron said the bulk of the funds, $47.3 million, will be used to cover cost overruns at its Sydvaranger iron ore project in Norway.

The cost blowout was due to a delay in the completion of construction as well a foreign exchange loss due to the depreciation of the Norwegian Krone.

"These events plus a desire to maintain an allowance for additional working capital have led to the need for a capital raising," Northern Iron said.

"The entitlement offer is intended to raise sufficient funds to see the Sydvaranger iron ore project entirely commissioned by October 2009 and to leave sufficient working capital flexibility for project ramp-up."

Meantime, chief operating officer John Sanderson has been appointed the new chief executive of Northern Iron.

Outgoing CEO Mick McMullen will remain until the end of October to ensure a smooth transition.

 

 

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