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  • Ironbark Zinc Raises $2.5M Through Oversubscribed Bookbuild 0 comments
    Aug 12, 2014 7:40 PM

    Ironbark Zinc (ASX:IBG) has raised $2.5 million but could have attracted $10 million in a heavily oversubscribed bookbuild to progress permitting and pre-development preparation works at its wholly-owned Citronen Zinc Project in Greenland.

    Citronen is one of the world's largest undeveloped zinc projects with a current resource of 71 million tonnes at 5.7% of zinc and lead.

    The placement will be undertaken in one tranche of up to 28 million shares at $0.09 each.

    "We are delighted by the overwhelming interest received for the placement, which was more than four times oversubscribed, reflecting the strong support for Ironbark and our Citronen Zinc Project," managing director Jonathan Downes said.

    "We have taken a disciplined approach to restrict the size of the raising to minimise dilution to our shareholders, due to our firm view that zinc prices will continue to increase in the face of a looming zinc supply shortage as major global zinc mines are scheduled to close, and as we continue to progress our Citronen Project over the coming period.

    He added that global zinc stockpiles have continued to fall while zinc prices have continued to rise.

    "As the 100% owner of one of the world's largest, and arguably only significant zinc projects held by a junior, Ironbark is uniquely positioned to take advantage of a stronger zinc market with its advanced and large scale Citronen Zinc Project and strategic partners China Nonferrous, Nyrstar and Glencore.

    "We look forward to making significant progress on permitting and development as we progress the project to the next stage."

    Citronen Zinc Project

    The Citronen Project is recognised as a project of strategic importance in the "Oil and Mineral Strategy for 2014 to 2018" document where its development is expected to deliver strong employment and revenues to Greenland.

    It is well positioned next to a deep water fjord and is considered to be of a SEDEX style zinc deposit that commences from the surface, is shallow, flat lying and shows no sign of limitation in its scale.

    Resources at Citronen are contained within near surface and underground prospects known as Esram, Beach Zone, XX and Discovery Zone that are contained within mineral lease 2007/02, and are open ended along strike.

    Ironbark continues to make towards the granting of a Mining Licence having submitted in June the key Social Impact Assessment.

    It has also entered into a new non-binding Memorandum of Understanding with China Non-Ferrous Metal Industry's Foreign Engineering and Construction to advance the Citronen engineering procurement and construction as well as financing arrangements.

    The company had in the June quarter focused its attention on exploring opportunities for optimised shipping concepts, routes and marshalling areas for the Citronen project, working with NFC, Grontmij, Fednav and the relevant government bodies.

    Ironbark is leveraged to the zinc price, with over the past few months has moved from ~US$0.90/lb to ~US$1.10/lb (> 20% increase).

    Zinc is also the fourth most used metal globally with half of its used in construction, roofing and vehicle industries.

    Analysis

    The heavily oversubscribed bookbuild to raise $2.5 million is a clear sign of support from investors in the company and its Citronen Zinc Project and rising zinc prices over the past year.

    This funding will allow it progress the project as zinc princes continues rising amidst a looming zinc supply shortage.

    Ironbark Zinc has $2.2 million in cash as of 30 June 2014 and a US$50 million convertible note funding facility with Glencore Xstrata to fund growth opportunities.

    Notably, this includes attractive offtake and marketing arrangements.

    Shares in Ironbark Zinc have risen past Proactive Investors' previous share price target of between $0.074 to $0.08 that was made on 10 June 2014. Shares in the company have risen 110% from $0.05 at that point to the current $0.105.

    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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