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  • MZI Resources Snares $3M Investment From Resource Capital Fund 0 comments
    Jun 30, 2013 9:01 PM

    MZI Resources (ASX: MZI) has signed up highly regarded resources private equity fund Resource Capital Fund as a cornerstone investor with a 12% stake through a $3 million share placement.

    Importantly, the two parties are discussing a larger funding package to help underpin development of the Keysbrook mineral sands project in Western Australia.

    "RCF's decision to invest in the company is an immense vote of confidence in Keysbrook and will play an important role in securing the full funding for the project's development," chief executive officer Trevor Matthews said.

    "MZI is in the process of finalising the Keysbrook debt arrangements with the Joint Lead Arranger banks, and is also assessing proposals for the construction and mining contract works at Keysbrook.

    "There is a high level of activity and confidence in the company and we look forward to finalising the funding arrangements and moving Keysbrook into development."

    MZI is also undertaking a Share Purchase Plan to enable shareholders to participate at the placement price of $0.01296 per share. This is capped at $3 million.

    In addition, the company is currently assessing proposals for the construction works for the project, as well as seeking proposals from mining contractors.

    Both initiatives are being progressed with the aim to ensure the most appropriate risk and cost balance for project development and operations.

    Resource Capital Fund investment

    RCF, a US-based private equity group managing US$3.4 billion of resources assets, had subscribed for 231,481,482 new shares priced at $0.01296 each.

    This represents a 14 per cent discount to the volume weighted average price (VWAP) of MZI shares in the five trading days immediately prior to the recent trading halt on 28 June.

    As part of its placement with MZI, RCF has the right to appoint a representative to the MZI Board as long as it continues to hold a voting interest of more than 5%.

    Up to 30 June 2014, RCF has a first right of refusal and a matching right to provide any funding sought by the company that is in the form of debt (other than project finance debt facilities in relation to the Keysbrook project) or hybrid securities.

    MZI and RCF will work together over the coming weeks to finalise a broader capital support package for the Keysbrook Project to complement the project finance debt facilities already being progressed by the company.

    The two mandated Joint Lead Arranger banks remain positive on the Keysbrook Project and MZI are working to finalise the remaining matters to enable a credit approved offer to be provided in respect of the project finance debt facilities.

    Share Purchase Plan

    MZI is offering shareholders the opportunity to subscribe for up to $15,000 worth of shares priced at $0.01296 to raise up to $3 million.

    This is not underwritten though the company reserves the right to seek - with shareholder approval - the right to place nay shortfall shares.

    Keysbrook Mineral Sands Project

    MZI has been progressing development of the Keysbrook project in recent months.

    It had in mid-June executed the key Port Services Agreement with the Bunbury Port Authority in Western Australia that provides sufficient capacity to export all products that will be produced from its Keysbrook mineral sands project.

    It had in April signed a crucial sales agreement with DuPont Titanium Technologies that covered all of the leucoxene 70% titanium dioxide production and had also reached a mineral sands toll treatment deal with Doral.

    The Keysbrook Project will produce an average 91,000 tonnes per annum of mineral sands products, comprising:

    - 26,000 tonnes per annum (dry) of leucoxene 70% titanium dioxide;
    - 36,200 tpa (dry) of leucoxene 88% titanium dioxide (L88); and
    - 28,700 tpa (dry) of zircon concentrate.

    Heavy mineral concentrate will be trucked about 120 kilometres to Doral's mineral separation plant, which is just 10 kilometres from the Bunbury Port.

    Analysis

    With one of the world's top resources private equity funds in its corner, MZI Resources continues to edge its flagship Keysbrook project closer toward development.

    Besides the funding it provides, the investment is also a sign of confidence in the project that will aid the company as it finalises project finance debt facilities with its two mandated Joint Lead Arranger banks.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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