Source : THE AGE NEWS
By Belinda Hickman
Macarthur Minerals’ $2 million capital raise could open the door for joint venture partner and mining contractor Gold Valley Yilgarn to become a cornerstone shareholder in Macarthur, with Gold Valley agreeing to underwrite Macarthur’s rights issue. The new entitlement offer will help fund Macarthur’s general expenses until a Western Australian hematite royalty starts rolling in.
Macarthur announced the pro rata non-renounceable offer on Friday, which entitles eligible shareholders to subscribe for one new share at 2 cents a share for every two existing shares held. The company has sweetened the offer with a free option attaching to every two new shares subscribed for, with a 3c a share strike and a two-year horizon.
Macarthur Minerals’ $2 million capital raise could open the door for JV partner Gold Valley Yilgarn to pick up a reasonable slice of the company.
Gold Valley is a private, Perth-based exploration and mining development company with big ambitions. It is owned and chaired by savvy Perth-based iron ore player Yuzheng Xie and earlier this year lobbed a $73M takeover bid over the fence at the Mark Creasy-backed CZR Resources. That bid was ultimately overtaken by the deeper-pocketed Rio Tinto, but speaks to Gold Valley’s ambitious nature.
‘We are pleased to have secured the full underwriting support of Gold Valley, which recognised the opportunity and committed without hesitation.’
Macarthur Minerals executive chairman Cameron McCall
Macarthur and Gold Valley signed a joint venture agreement in June last year granting Gold Valley the right to mine hematite iron ore from Macarthur’s Lake Giles Ularring prospect in WA.
That broader Lake Giles project has more than 1.2 billion tonnes in magnetite iron ore resources, including a hefty 272 million tonnes of defined reserves in WA’s Yilgarn region.
The Ularring hematite deposit, which is the subject of a royalty deal with Gold Valley, includes 54.5Mt grading 47.2 per cent iron in indicated resources and 26Mt at 45.4 per cent iron in the inferred category.
The deal includes a milestone $5M payment upon Gold Valley mining and selling 1M tonnes of hematite and a further $5M payment for the next 1M tonnes of ore.
Beyond the initial tonnages, Macarthur will receive a $1 per tonne royalty for all additional tonnes for the life of the mine.
Gold Valley has already made two of three $250,000 staged payments agreed additional to the royalty payments.
Macarthur management sees Gold Valley’s decision to act as underwriter of the latest rights issue as significant confirmation of the company’s commitment to complete and mine Ularring.
Macarthur Minerals executive chairman Cameron McCall said: “We are pleased to have secured the full underwriting support of Gold Valley, which recognised the opportunity and committed without hesitation.”
Gold Valley particularly focuses on tier-one jurisdictions in WA and the Northern Territory.
Its flagship Wiluna West C4 iron ore project, 750 kilometres east of Geraldton, is being operated by its subsidiary PRG Mining Services. Gold Valley has an offtake agreement with Glencore for all production from C4, which has a 21.6Mt resource estimate, grading at 60.7 per cent iron.
In 2024, it acquired the Wiluna West iron ore project, with a total JORC compliant resource of 120.3Mt at an average grade of 60 per cent iron.
The company is also a joint venture partner in the Yaram iron ore project in the Territory, which has a 1.2Mt per annum production target and operates the Speedway magnetite project in Tasmania.
Macarthur has almost 200M shares currently on issue, about 23M options and a market capitalisation of $4M. Its stock has been trading at about the issue price of 2c a share.
The latest rights issue will see it issue a further 100M shares and close to 50M options, taking its capital structure to a manageable 300M shares.
Macarthur says it will use the capital raise funds as general working capital to see it through until royalty payments begin rolling in from the Lake Giles deal.
Earlier this month, the previously triple-listed Macarthur announced it was packing its bags after pulling the pin on its Canadian Venture Exchange and OTC market listings to consolidate its investor base squarely on the Australian Stock Exchange.
The company wants to refocus on tighter cost controls and a stronger alignment with its predominantly Australian shareholder base as it progresses its flagship Lake Giles project.
The proposed royalty payments from Gold Valley to Macarthur will be a game changer for the $4M market capped company, with the very first royalty payment set to be greater than the entire company’s market cap. It would seem at face value, at least, Gold Valley is good for it too.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
