06/05/2009 - 15:23

Stirling raises $10m for Olympia deal

06/05/2009 - 15:23

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Stirling Resources has extended its financial relationship with Austrian commodities trader DCM DECOmetal, raising $10 million to acquire Matilda Minerals mineral sands assets.

Stirling Resources has extended its financial relationship with Austrian commodities trader DCM DECOmetal, raising $10 million to acquire Matilda Minerals mineral sands assets.

Part of the funds will be used to complete the asset purchase from administrators of Matilda Minerals. The assets will be transferred to Olympia Resources under a deal struck with Territory Resources late yesterday.

Under the deal, Stirling will acquire Territory's 73 per cent holding in Olympia for $1.75 million, which is equivalent to Olympia's debt to Territory.

The transaction is conditional on Olympia acquiring Matilda's assets for $6 million, to be satisfied by a combination of scrip and a $1 million deferred cash payment.

Stirling has also agreed to provide an immediate loan of $350,000 to Olympia, which will be converted to 35 million shares.

Should the proposed transaction receive shareholder and ministerial approval, Stirling will emerge with an 82 per cent shareholding in Olympia.

Stirling said today part of the funds will also be used to help restart mining operations at the Tiwi Islands zircon project, which was previously owned by Matilda.

Earlier this year, Stirling raised $2.6 million through a convertible note to DCM.

 

 

The announcement is below:

 

 

Australian resources developer Stirling Resources Limited (ASX: SRE) announced today it has concluded an agreement with international commodity trading group and strategic partner DCM DECOmetal GmbH to fund the Company's expanding zircon portfolio.

DCM (www.dcm-vienna.com) will provide the funding to Stirling's wholly owned subsidiary Stirling Zircon Pty Ltd.

A summary of the key terms and conditions are:

- Principal: AUD$10,000,000
- Interest Rate: Fixed at 9.375%; Payable quarterly in arrears; Interest may be capitalized at DCM's discretion
- Repayment date: 3 years
- Security: Fixed and floating charge over the assets of Stirling Zircon (subject to shareholder approval)

The funds will be used to complete the mineral sands assets acquired from Matilda Minerals Limited (ASX: MAL), recommence mining at the Tiwi Islands zircon project, undertake a significant exploration programme on the highly prospective Cape York tenements and provide funding for Olympia Resources Limited (ASX: OLY).

Stirling Resources Managing Director Michael Kiernan said the agreement was a strong endorsement in the future of the zircon industry, the potential of the Matilda assets and the strategic direction of Stirling.

The Tiwi Islands project, currently on care and maintenance, has historically produced 46,000 tonnes of zircon concentrate grading 50% zircon.

The Cape York Zircon Project, north of Weipa in Queensland, includes more than 300 kilometres of prospective coastline. Previous preliminary exploration has identified high grade zircon occurrences and significant strandlines, with potentially low strip ratios and low slime levels.

"The Cape York Peninsula and Urquhart Point area potentially encompasses what is arguably the largest unexplored prospective mineral sands terrain in the world," Mr Kiernan said.

"We retain a very positive outlook for the zircon market, with demand continuing to be supported by the global urbanization trend, particularly in China, and believe Stirling will be well positioned to capitalize on these opportunities," Mr Kiernan said.

Zircon together with gold is one of the very few commodities that have remained firm with the price increasing over the last 12 months to currently be in the order of US$850 - $900 per tonne.

Mr Kiernan said Stirling have in place a five year strategic development plan, with targeted production goals in the commodities of copper, zircon, gold, coking coal and iron ore. Over the next five years, Stirling is targeting to build up production of zircon concentrate to the equivalent of 50,000 tonnes per annum.

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