By Spight24 Jul 2015 08:43
http://www.iii.co.uk/investment/detail?code=cotn:POL.L&display=discussion
Hi Maureen:
The downturn in the commodities industry hasn’t been overly helpful to Ironstone, and especially to our peers in the iron industry these past few years. While we have been able to manage our finances to continue to move the project forward, albeit at a reduced pace, I am hopeful the industry will see some uptick soon.
Currently, Ironstone is undertaking a Rights Offering to our shareholders, with the intent of funding our Preliminary Economic Assessment (PEA) commencing in August, with an expected delivery date in October. The PEA will be the lynchpin in Ironstone approaching institutional and strategic investors this fall for a larger $10 million raise to fund our next phase of pilot testing.
We expect proceeds to amount to approximately $1 million. Both Baker Steel and Samos Investments have agreed to participate for their pro-rata share of the offering.
While I have been in touch with Polo, there has not been any indication of their intent to participate at this time, although management there are reviewing the offerings details and I expect a decision imminently.
Our mine development partner North American Coal (Plano, Texas) has just completed our preliminary 25-Year Mine Plan which will be incorporated into our PEA. This is great body of work that forms a key element of our capital and operating cost estimates for the PEA.
What will impact Polo is that the Board, in recognition of the impact of the downturn in the commodity sector and the dramatic lowering of market valuations of our peer group, has approved the averaging down the share price of our UK shareholders to C$0.70 from C$1.32 (“price protection amendment”). This will have the effect of increasing Polo’s interest in Ironstone from 14.9% to approximately 19.0%. While this price protection amendment may remove any incentive to participate in our rights offering, we believe its the right thing to do for our long-term UK shareholders who have shown support and patience during these challenging economic times. Ironstone’s implied market cap will be approximately C$55 million post-offering.
We hope to enter Q4 in decent financial shape with a focus on financing our important upcoming development milestones, including the commercial pilot test leading to our pre-feasibility study.
I hope this update helps. If you have any other questions or comments, please drop me a line.
Cheers;
Barry
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