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Labrador Iron Mines announces C$25.2m equity financing
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18th January 2013
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TORONTO (miningweekly.com) – Canada’s newest direct-shipping iron-ore producer Labrador Iron Mines (LIM) on Friday said it had entered into an underwriting agreement with a syndicate of underwriters led by Canaccord Genuity for a C$25.2-million equity financing.

The financing is intended to fund prestripping, mining and processing costs, including payments to LIM's mining contractors and transportation costs, such as tariff payments to Tshiuetin Rail Transportation and the Quebec North Shore and Labrador Railway Company with regard to the seasonal restart operations in April.

The financing would also be used for capital and infrastructure expenditures on the Silver Yards processing plant, including the connection to hydropower and to supplement working capital and for general and administrative costs for the remainder of the winter season.

The syndicate of underwriters included RBC Dominion Securities, Scotia Capital, Macquarie Capital Markets Canada, Jennings Capital and Raymond James, which would sell 24-million units of the company at C$1.05 a unit.

Each unit would consist of one common share of the company and half a common share purchase warrant, which would entitle the holder of each warrant to buy one common share of the company at a price of C$1.35 a share for a period of 36 months from the February 5 closing date.

LIM said it had also granted the underwriters an overallotment option to buy up to 3.6-million additional units for additional gross proceeds of up to C$3.7-million.

Anglesey Mining, a significant shareholder and insider of the company, which currently holds 19.2-million shares or about 19.5% of the company's outstanding shares, had agreed to buy a total of three-million units on a nonbrokered private placement basis at a price of C$1.065 apiece for proceeds of C$3.19-million.

Proceeds from the private placement would be used to bolster the company's working capital and for general corporate purposes.

The company’s stock rose sharply in recent weeks following news early this month that Taiwan's China Steel and South Korea's Posco led a group of investors that had agreed to buy 15% of ArcelorMittal Mines Canada.

In the past month the company’s TSX-listed stock had risen by 25%; however, on Friday, the company’s shares were down 13.27% at 98 Canadian cents apiece.

Edited by: Creamer Media Reporter

 

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Picture by: Labrador Iron Mines