Sandfire
Resources NL (ASX: SFR)
SANDFIRE SECURES STRATEGIC ALLIANCE
WITH korea’s
POSCO
A$7.2M SHARE PLACEMENT AND
OFF-TAKE AND MARKETING ARRANGEMENTS
·
Proposed A$7.2M share placement to
Posco Australia,
a subsidiary of Korean-based POSCO, the second largest company in South Korea
and the world’s fourth largest steel producer.
·
Share placement comprises 16.5M
fully paid shares at 40 cents and 2.5M partly paid ordinary shares at 25 cents
(with 15 cents unpaid).
·
Subject to all necessary
approvals, Posco Australia to become Sandfire’s cornerstone shareholder with a 19.99%
stake.
·
Off-take agreement with Posco for up to 30% of future mineral production from Sandfire projects (excluding gold and diamonds).
·
Sandfire
to accelerate exploration & evaluation of its diversified portfolio of
manganese, lead-zinc-silver, iron ore and gold projects in Australia.
·
Positions Sandfire
to target additional strategic resource opportunities.
Diversified
Australian resource company, Sandfire Resources NL (ASX: SFR – Sandfire
or the Company), is pleased to announce that it has finalised
agreements with Posco Australia Pty Ltd (POSA),
a subsidiary of the leading Korean-based global steel group POSCO, to acquire a
strategic 19.99% stake in Sandfire through a proposed
share placement comprising 16.5 million fully paid shares at 40 cents each
and 2.5 million partly paid ordinary shares (Contributing Shares) at 25 cents
each (with 15 cents unpaid).
The
Share Subscription Agreement, together with a Commercial Agreement, establish
the foundations for a long-term alliance between Sandfire
and POSCO, providing an immediate A$7.2 million cash injection as well as the
financial backing and strategic marketing, technical and corporate support of
the world’s fourth largest steel producer, a Korean-based global company
with a market capitalisation of some US$45 billion.
This
will enable Sandfire to accelerate the exploration of
its high quality diversified portfolio of manganese, lead-zinc-silver, iron ore
and gold projects in Australia,
as well as position the Company to take advantage of additional resource
opportunities, both in Australia
and overseas.
Share Placement
Under
the Share Subscription Agreement, POSA will subscribe for a total of 16.5
million fully paid shares at a price of 40 cents each and 2.5 million
Contributing Shares at 25 cents each (with 15 cents unpaid), equivalent to a
19.99% interest in the Company on a post-issue basis. The share placement is
subject to the following conditions:
·
approval by Sandfire
shareholders at a General Meeting to be convened as soon as practicable; and
·
relevant approvals from the
Foreign Investment Review Board of Australia (FIRB).
Following
completion of the share placement, Sandfire will have
a total of approximately 82.5 million fully paid shares and 12.7 million
Contributing Shares on issue. The funds raised will strengthen its cash
position to approximately A$9.2 million.
Under
the agreement, POSA also has the opportunity to maintain its interest in the
Company by participating in future capital raisings for as long as POSA retains
a 10% holding of ordinary shares in Sandfire.
Commercial Agreement – Off-take and Marketing
Under
the Commercial Agreement, Sandfire has agreed to
offer the right to POSA for it or POSA nominated affiliates to purchase up to
30% of its future mineral production on commercial terms and has appointed POSA
as its marketing agent in the Republic
of Korea.
In
addition to the commercial arrangements above, provision has been made for POSA
to nominate a POSA representative to be appointed to the Board of Sandfire.
As
with the POSA’s rights under the Share
Subscription Agreement, the rights under the Commercial Agreement remain for as
long as POSA has a 10% holding of ordinary shares in Sandfire.
Use of Funds AND Strategy
The
funds raised from the share placement will be utilised
to accelerate exploration across Sandfire’s
extensive Australian mineral portfolio, including:
·
continued exploration at the Borroloola Lead-Zinc Project in the Northern Territory,
located near the world-class Macarthur River base metals project and Groote Eylandt Manganese Mine,
where Sandfire has recently confirmed the potential
for both lead-zinc-silver and manganese mineralisation;
and
·
further drilling to establish a
JORC Code compliant resource estimate at the Doolgunna
Iron Ore Project, located 140km north of Meekatharra,
where the potential for extensive high-grade hematite mineralization has been
established; and
·
ongoing exploration at the Doolgunna Gold Project, where recent drilling has confirmed
the potential for high-grade gold mineralisation
offering the potential for a near-term project development and cash flow
opportunity.
Posco is the world’s
fourth largest steel producer and a leading global company with a market capitalisation of some US$45 billion. Posco plans to increase the steel-making capacity of its
Korean operations to 35 million tonnes per annum in
2008 through modernisation and expansion.
It
is also aggressively expanding into growth markets in Vietnam and India, with the aim of lifting its
global steel-making capacity to 50mtpa by the end of the decade.
Commenting
on the agreements, Sandfire’s Chairman, Mr Miles Kennedy,
said: “We are delighted to have the support of POSA both as a major
shareholder and as an off-take partner and marketing agent for the continued
development of Sandfire’s exciting mineral
portfolio. This alliance will give us the financial, technical and
corporate backing of one of the world’s leading consumers of carbon steel
materials, which has strong existing relationships with the Australian
resources industry. We intend to accelerate our existing exploration
programs with a view to continuing to develop a high quality resource base in Australia
in a number of strategic commodities including manganese, lead-zinc-silver,
iron ore and gold, as well as review additional commodity-related business
opportunities with the support of Posco.”
POSA’s Managing
Director, Mr SM Woo, said: “We are very pleased
to announce this strategic investment in Sandfire
Resources, which has assembled an outstanding portfolio of mineral projects in Western Australia and the Northern Territory.
“We
look forward to working with Sandfire’s
management team to advancing these promising opportunities, each of which is
located in a world-class mineral province and has the potential to evolve into
a substantial production asset.
“The
arrangements, principles and terms encompassed by these agreements will ensure
that Posco can benefit from any major mineral
discovery that eventuates from Sandfire’s
exploration activities as a supportive cornerstone shareholder and under
clearly defined off-take and marketing arrangements.”
-
ENDS -
Released
by:
On behalf of:
Nicholas Read
Miles Kennedy, Chairman
Read
Corporate
Karl Simich,
Director
Telephone:
+61-8 9388
1484
Sandfire Resources NL
Mobile:
0419 929
046
Telephone: +61-8 9226 5833
READ CORPORATE
Public Relations
Corporate Communications
T: (+61-8) 9388-1474
| F: (+61-8) 9388-1472 | E: info@readcorporate.com.au | Web: www.readcorporate.com.au
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