PERTH (miningweekly.com) – ASX-listed Korab Resources has secured A$6-million in funding through its subsidiary AusMag to fund the development of the Winchester magnesite mine, in the Northern Territory.

Korab on Wednesday announced that Hong Wang, a representative of the Chinese steel industry, banking and finance, construction and building materials sectors, would invest A$6-million into new shares in AusMag.

The share sale would result in Korab owning a 70% to 75% interest in AusMag.

AusMag would use the funds to develop the mine and start production of magnesite. The mine was being developed to initially produce high-grade direct shipping ore magnesite to supply producers of magnesium oxide, refractories and other users.

A prefeasibility study estimated that the Winchester project would require a capital investment of A$4-million and considered various capacity levels, ranging from a 250 000 t/y to a one-million-tonne-a-year run-of-mine capacity.

The share sale agreement was conditional only upon AusMag arranging the sale of at least 500 000 t/y of raw magnesite rock, for a period of at least three years.

Korab told shareholders that the company had 12 months in which to arrange for the sale of 200 000 t/y of magnesite rock, considering that in November last year, the company had arranged for an offtake agreement under which 300 000 t/y of raw magnesite rock would be sold to an unnamed offtake partner, for a period of five years.

In addition to the share subscription, Wang would also become a new strategic investor in Korab by subscribing for 10-million new Korab shares, at a price of 5c each, for a total A$500 000 investment.

Furthermore, Wang would also have the right of first refusal to provide, or arrange the provision of funding for the construction and commissioning of calcination and processing facilities to allow AusMag to add production of calcined, dead burned and fused magnesia to the production of raw magnesium carbonate rock, should the decision be taken to expand production at Winchester.