IRON-ORE Baobab has discovered and defined a 759-million-ton iron-ore resource in the Tete province, of Mozambique
To enable it to access equity funding of about $12-million, Mozambique-focused exploration company Baobab Resources on May 20 delisted its shares from Aim.
In its six-month interim result report for the period ending December 2014, which was released in March 2015, Baobab said that it required additional equity of about $12-million to finance the completion of the bankable feasibility study for its Tete pig iron and ferrovanadium mining projects, repay its existing and future indebtedness to funding institution Redbird and affiliated entities, and finance its near-term working capital requirements.
Baobab in March further reported that it had a working capital deficit, which excluded its existing loans, and required immediate additional funding.
“It is likely that any such equity funding would require the support of Redbird, which has indicated that it is no longer willing to provide further funding to the company while its shares remain publicly quoted, but is willing to provide continuing support to the company and thereby safeguard shareholder value as an unquoted company,” noted Baobab.
In addition, Redbird has also made a cash offer for all Baobab’s shares it did not already own. As of April 17, Redbird has received valid acceptances of this offer, representing about 40% of the company’s issued share capital, giving Redbird a total 81.05% shareholding in the miner.
These offer acceptances also satisfied the offer’s minimum acceptance condition, making it unconditional.
About Baobab
Baobab has discovered and defined a 759-million-ton iron-ore resource in the Tete province of Mozambique. The company is developing the Tete pig iron and ferrovanadium project in partnership with the International Finance Corporation, which holds a 12.89% participatory interest.
Owing to the project’s strategic access to the core iron and steelmaking commodities of iron-ore, coal, power, water and other raw materials, Baobab says that it is pursuing a unique opportunity to add value in-country.
Further, Baobab has been investigating reduced production scenarios with smaller capital requirements and has engaged with leading Chinese engineering, procurement and construction contractors to find ways to further reduce capital costs and fast-track project execution.