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(Sharecast News) - Ironveld announced a new strategic partnership with Inclusive Investment Group (IIG) on Monday, part of which involved it entering into arrangements to raise potential total gross proceeds of about ?2.7m.
The AIM-traded firm said the fundraising comprised an option agreement between itself and IIG under which, on grant of the option, IIG could subscribe for 440,176,070 new ordinary shares at a price of 0.42p each.
It also consisted of a term loan from IIG of $1m (?0.84m) to be entered into on completion of the subscription, which would be capable of conversion at the issue price.
The grant of the option and the fundraising in general were wholly conditional on shareholder approval being granted at a general meeting, and to the takeover panel granting a rule 9 waiver.
Ironveld described IIG as an investment vehicle associated with Mcebisi Jonas and Monwabisi Twantwa in South Africa, which it said was "at the forefront" of securing development for South Africa's coming wave of battery and strategic metals projects.
Following completion of the subscription and the issue of the salary shares, IIG would own around 36% of the firm's issued ordinary share capital to become Ironveld's largest shareholder, and would provide expertise and utilise its extensive African connections to secure the larger-scale funding required to develop its near-term high purity iron, vanadium and titanium project.
IIG has agreed to pay Ironveld an option fee of $0.25m within three days of the date of the option agreement, with such funds to be deductible from the eventual subscription proceeds.
That fee would be non-refundable unless the rule 9 waiver was not granted or the resolutions were not approved at the general meeting, in which case the fee would be repayable in full.
Ironveld noted that the issue price of 0.42p per new ordinary share represented a discount of 17.9%, compared to the 20 day volume-weighted average price of 0.5113p, and a premium of 5.0% to the mid market price of 0.4p on 27 March.
The two companies had also agreed that IIG would nominate two non-executive directors to Ironveld's board following completion of the fundraising.
Ironveld and IIG's relationship would be governed by a relationship agreement between the two on normal commercial terms, the directors explained, limiting the ability of IIG to dictate Ironveld's strategy and board composition.
In addition, certain Ironveld board directors had agreed in principle, conditional on completion of the fundraising, to capitalise substantially all of their historic deferred salaries and fees totalling approximately ?0.54m, for 129,195,548 new ordinary shares in the capital of Ironveld, at the same issue price of 0.42p.
"This fundraising and strategic partnership mark a significant milestone for the company which we believe will allow us to commence unlocking value from our project," said chief executive officer Martin Eales.
"We are delighted to be working alongside IIG as our strategic partner and have no doubt that together we can capitalise on Ironveld's huge potential.
"We look forward to keeping the market updated on our progress."
Giles Clarke, chairman of Ironveld, added that the agreement was the culmination of a "great deal of hard work" by Martin Eales, Peter Cox and the team.
"We are delighted to welcome IIG as a shareholder and most importantly Mcebisi Jonas and his colleagues who are immensely well equipped to transform Ironveld's fortunes and lead the development of the project."
At 1429 BST, shares in Ironveld were up 37.52% at 0.55p.
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