26/02/2020 - 12:42

Strandline to raise $6.5m

26/02/2020 - 12:42

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Mineral sands company Strandline Resources is raising $6.5 million through a share placement and fully-underwritten rights issue to accelerate work at its flagship Coburn project in Western Australia.

Strandline to raise $6.5m
The Coburn project is located 240 kilometres north of the regional centre and port of Geraldton. Photo: Strandline

Mineral sands company Strandline Resources is raising $6.5 million through a share placement and fully-underwritten rights issue to accelerate work at its flagship Coburn project in Western Australia.

Strandline said the proceeds would advance project financing and pre-execution activities, such as the procurement of construction and operations contracts, as well as fund offtake agreements, debt financing and partner arrangements.

Funds will also be used to progress the company’s wholly owned mineral sands projects in Tanzania.

Strandline said it would issue approximately 16.6 million shares to a new institutional investor at 12 cents per share to raise $2 million, with Hartleys acting as lead manager to the placement.

The company will also issue 12-cent shares under a 1-for-10 rights issue, underwritten by Morgans Financial and sub-underwritten by specialist mining fund and 33 per cent Strandline stakeholder, Tembo.

Strandline managing director Luke Graham said the proceeds raised would ensure the company could pursue its accelerated development strategy for the Coburn and Fungoni (Tanzania) projects.

He said Strandline was well positioned to capitalise on the emerging supply deficit for high grade zircon and titanium feedstocks.

“This is reflected in the favourable feedback from potential lenders, customers, contractors and stakeholders,” Mr Graham said.

“This raising will ensure we can progress ahead with work on all these fronts with the aim of bringing our projects into production as quickly as possible.”

Last week, Strandline said it had made strong progress on securing funding for the Coburn project, with the appointment of SRK Consulting (Australasia) as independent technical expert on behalf of lenders.

Due diligence on the project is now under way.

A definitive feasibility study for Coburn was completed last year, revealing an initial 22.5-year mine life and ore reserve of 523 million tonnes at 1.11 per cent total heavy mineral.

Strandline said the DFS showed Coburn would generate strong financial returns for the company, with a pre-tax net present value of $551 million and 32 per cent internal rate of return.

The site is located 240 kilometres north of the regional centre and port of Geraldton.

Shares in Strandline Resources were down 12 per cent to trade at 11 cents per share, as at 2:25pm AEDT.

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