South African speciality metals producer Ironveld will raise £1-million to be used as working capital, with its largest shareholder Tracarta to provide £450 000 of the funding.
Tracarta, in which Ironveld nonexecutive director Dr John Wardle has a beneficial interest, will subscribe for 162-million new Ironveld shares, at a price of 0.278p apiece.
Further, Turner Pope, acting as the company's broker, has procured orders for a further 198-million new Ironveld shares for £550 000 from existing shareholders on the same terms, pending shareholder approval.
Aim-listed Ironveld's mining division mines vanadiferous and titaniferous magnetite for sale to industrial users and to its own smelting division, which processes the magnetite ore into high-purity iron, vanadium slag and titanium slag.
The company says the operations at its Rustenburg smelter have consumed a greater amount of cash resources than originally planned since mid-September. In particular, critical repairs and optimisation work, costing about £250 000 to rectify, combined with a material interruption to planned production during October, have created a requirement for additional working capital.
The Ironveld board considers it prudent to maintain a larger working capital buffer in order to provide maximum flexibility in maintaining operations and believes that the fundraising represents an attractive option.
Following the subscription by Tracarta, Wardle will assume the role of Ironveld executive chairperson, while outgoing chairperson Giles Clarke will remain a nonexecutive director.