JOHANNESBURG (miningweekly.com) – The £500 000 of funding raised on Thursday by triple-listed Ferrum Crescent will enable the company to complete the bankable feasibility study (BFS) at its high-quality Moonlight magnetite iron-ore project, in Limpopo.

The company had received applications from shareholders to subscribe for 100-million shares at £0.005.

The placement shares would rank equally with existing fully paid ordinary shares from allotment.

Ferrum MD Tom Revy said the BFS would expand the total resource of the Moonlight project. “The support of both black economic-empowerment (BEE) group PMI and Ferrum shareholders allows us the security to bring the project towards construction financing, while retaining significant value for all parties.

“Our job now is to complete our key operational workflows and also communicate to investment markets that value iron projects for junior companies should not be based on direct shipping ore and scale. We are developing a specialist product for the steel industry that is capable of delivering significant margins, especially in an iron-ore market that is undergoing fundamental changes,” he added.

Subscribers to the placement shares included Allan Jenks-controlled Grassroots Exploration, which would subscribe for 13-million shares. Grassroots Exploration, which already held 77.5-million shares, or 14.93%, of Ferrum prior to the subscription, would now hold 90.5-million shares.

Application would be made for quotation of the placement shares on the ASX, LSE and JSE, with trading to start on or around May 20.

Following the completion of the placement, Ferrum would have 618.7-million shares in issue.

While iron-ore spot prices have remained low, the Moonlight complex, located near the Thabazimbi rail hub, would produce a high-grade magnetite direct reduction grade product that could be produced and shipped to customers using an established infrastructure network.

Since the BFS was restarted, the final pit location had been established, ready for advanced reserve drilling and large-scale metallurgical testwork. With these workflow components in place, the miner had progressed engagement with stakeholders including infrastructure providers, government, BEE companies and local community groups.

This period of engagement also enabled Ferrum to sign terms for a $12-million funding agreement with PMI to earn a 39% stake in Ferrum Iron Ore, the entity that owned the Moonlight project.

Today’s placing secured funds to cover basic corporate overheads, while simultaneously progressing the PMI-funded BFS at Moonlight.

In addition, funds would be deployed towards a new exploration-drilling programme at the Julietta farm, to increase the overall project resource.

Following infrastructure discussions and a desktop analysis of increasing rail capacity in Limpopo, Ferrum started a full market study of South African steel manufacturing.

The company believed there was a significant opportunity to vend Moonlight’s high-grade product to domestic steel users, obviating the need to ship pellets through Richards Bay.

The study was also started following increasing interest in Moonlight from South Africa and the opportunity such a route would afford in reducing full capital expenditure and increasing potential margins.