West Perth-based Red River Resources will aim to raise up to $6.9 million before costs through a non-renounceable rights and options issue, to fund further exploration of its mid west iron ore and Tasmanian projects.
West Perth-based Red River Resources will aim to raise up to $6.9 million before costs through a non-renounceable rights and options issue, to fund further exploration of its mid west iron ore and Tasmanian projects.
The company will offer one new share for every two shares currently held, along with one free attaching option to raise around $4.6 million before costs, with profits rising to $6.9 million should all existing share options be exercised before the record date.
The full text of a company announcement is pasted below
The Directors of Red River Resources Limited ("Red River") are pleased to announce that Red River proposes a 1 for 2 non renounceable rights issue of ordinary shares to all shareholders at an issue price of 20 cents per share. In addition, for each share applied for under the non renounceable right issue there will be one free attached share option, exercisable at 20 cents each, on or before 31 March 2010 (same terms as existing share options on issue).
No approval is required from shareholders for the non renounceable rights issue.
In the absence of any share options being exercised before the record date, it is estimated that a further 22,861,752 shares and 22,861,752 share options will be issued pursuant to the non renounceable rights issue if all shares that can be applied for are subscribed to. The issue will not be underwritten. If all shares applied for, then Red River would raise approximately $4,572,000 before capital raising costs.
If all existing share options are exercised before the record date (not yet set but estimated to be around late June 2007) and all shares are applied for under the non renounceable rights issue ('Issue"), then approximately 34,723,252 shares and share options would be issued pursuant to the Issue. If all shares applied for, then Red River would raise approximately $6,944,000 before capital raising costs.
The actual sum that will be raised is unknown as it is not possible to determine the extent of support by shareholders for the Issue. Monies raised from the Issue will be used as follows:
- To further explore on the Feral iron ore prospect area. Mid West Region, Western Australia
- To further explore the Blythe project are. Northern Tasmania;
- Other exploration prospects held by the Company;
- Identify new exploration projects;
- General working capital.
Feral Prospect: Red River signed a Heads of Agreement (HOA) on the "Feral Prospect", a project whereby it can earn up to 75% equity in an area of promising iron ore mineralisation 20 kilometres south of the Koolanooka iron ore mine in the Mid West Region of Western Australia. Under the terms of the HOA, Red River may earn a 50% interest in exploration licence E70/2227 by expending $2 million on exploration over a period of four years commencing from the date of the execution of the HOA. Red River may then earn another 25% interest in the exploration licence by conducting further exploration and evaluation up to "bankable feasibility study". Recent sampling by the Company has identified numerous zones of iron enrichment that will be drilled in the latter half of 2007 and which hold good potential for the delineation of direct shipping grade hermatite ore.
Blythe Project: The Blythe project area in northern Tasmania holds strong promise for the discovery of iron ore, copper, gold and tin and the Company intends to carry out further drilling programs in the project area.
A Prospectus will be issued shortly in relation to the Issue and the record date will be announced.
The Company proposes to place any shortfall (assuming no existing share options are exercised before record date) within one month after the closing of the Issue.
