LONDON (Alliance News) - Shares in FinnAust Mining PLC soared on Wednesday after the miner struck a deal to acquire a titanium project in Greenland, leading it to promote its interim chief executive to become the company's permanent managing director.
FinnAust shares were up 26% to 0.695 pence per share on Wednesday morning, having hit 0.920p earlier.
FinnAust has signed binding agreements to acquire an initial 60% stake in Bluejay Mining Ltd, which wholly-owns the Pituffik titanium project in Greenland, with an option to acquire the remaining 40%.
The miner also announced it has promoted Rob McIllree, who was appointed as FinnAust's interim chief executive back in July, to be its permanent managing director. Significantly, McIllree is a director at Bluejay Mining, suggesting he played a major role in brokering the deal.
FinnAust Non-Executive Gregory Kuenzel also is a shareholder in Bluejay, meaning both McIllree and Kuenzel will receive shares in Finnaust through the deal as FinnAust is paying for the deal with shares.
For the initial 60% stake in Bluejay, FinnAust has paid GBP900,000 entirely through the issue of 164.7 million new FinnAust shares, which implies a price of about 0.5 pence per share. If FinnAust elects to acquire the other 40% of Bluejay, it will be required to pay another GBP594,393 through the issue of another 108.1 million shares.
The amount of shares being issued as part of the deal is significant, with FinnAust's share capital standing at a smidgen under 296.0 million shares before the deal. This means it is increasing its share capital by over 55% to acquire the first 60% stake in Bluejay. If it elects to acquire the other 40% of Bluejay, its share capital will have increased by over 92% in total.
Importantly, FinnAust said the option would "not be exercised if it would trigger a reverse takeover pursuant to the AIM rules".
In addition to the acquisition and board changes, FinnAust conducted a placing of 10.0 million new shares in the company at 2.0p per share to raise GBP200,000 with major shareholder Western Areas Ltd and Bluejay placees "demonstrating the strong support for the company and the Pituffik project," it said.
FinnAust shareholders will still have to approve the acquisition, and the company will also need clearance from authorities in Greenland. A shareholder meeting has been booked in for Christmas Eve.
The Pituffik project has had initial fieldwork carried out in 2015 by Bluejay, which has revealed the presence of a "very large and unusually pure" titanium occurrence, with work to date indicating the project could be in the top percentile of heavy mineral grade projects worldwide, said FinnAust.
Pituffik is also served by existing infrastructure and a supportive government which is looking to build a "resource-based economy", according to the company.
Overall, the new project will sit alongside the miner's existing operations in Finland and Austria, but FinnAust looks set to jump straight into Pituffik as it is already preparing initial work programmes with the aim of generating cashflow from a "relatively simple yet high value opportunity".
Further to the board changes, FinnAust has moved Graham Marshall to the role of non-executive chairman to replace the outgoing Daniel Lougher, who will move to a non-executive director position.
New Managing Director McIllree also is a non-executive director of fellow AIM-listed Noricum Gold Ltd.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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