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Radar Iron's (ASX: RAD) progress at the Johnston Range Iron Ore Project has caught the eye of Shinewarm Resources, which has invested $3.3 million in Radar at a premium price through a share placement.

Johnston Range is located in Western Australia's Yilgarn region, in close proximity to infrastructure.

Jonathan Lea, managing director of Radar, spoke to Proactive Investors today, saying that the funds raised would allow the company to progress the planned resource upgrade and commence mine development.

"The aim is to get to hopefully 8-10 million tonnes of hematite by the end of the year, so a lot of the funds are going towards the drilling of that," Lea said.

"Simultaneously we'll start feasibility studies on that project with an aim of getting into production as soon as possible, and hopefully we can start mining in 2014."

Last month, Radar delivered a maiden JORC Resource for the Muldoon prospect, within Johnston Range, of 2.1 million tonnes at 57.6% iron.

Importantly, using a lower cut-off grade than the 55% used to estimate the maiden resource, the mineralisation inventory for Muldoon exceeds 3 million tonnes at 56% iron.

In addition to good hematite grades, Radar's Yilgarn projects have infrastructure on their side. Lea told Proactive Investors that the infrastructure was government owned, meaning it is available to all producers in the region.

"It comes back to where our project area is, being close to infrastructure and having available rail and port potentially in a couple of years' time," Lea said.

"The capital costs for project development are expected to be relatively low for, say, a 1 million tonne per annum hematite operation initially."

Details of the placement

Shinewarm, the Hong Kong-based investment vehicle of Chinese Xiamen Meize Xinyuan Trading Co, took up 10 million shares in Radar at $0.33 each.

This price equates to a 22% premium to the company's current share price.

Lea said the premium price was indicative of the value of Radar's hematite projects.

"Shinewarm and its Chinese parent entity recognise the potential of Radar's Yilgarn projects and the realistic infrastructure options in the region as being superior to that currently available elsewhere in Western Australia," he said.

"It shows the confidence that Shinewarm have in the Yilgarn region for infrastructure."

The placement falls within Radar's 15% annual placement capacity, and does not require shareholder approval.

Completion of the share placement is scheduled to occur by June 15, 2012.

$50 million offtake agreement potential

Radar is also in discussions with Shinewarm regarding the provision of up to $50 million development capital.

This capital would fund hematite project development, and purchase 100% of all hematite produced from Radar's Central Yilgarn hematite projects.

"Shinewarm are keen to secure the hematite offtake from our projects, and we're more than happy to have them as our partner," Lea told Proactive Investors.

"Further to negotiations and agreement they will provide up to $50 million capital to the project for the offtake."

Under the current agreement, Shinewarm has the right to purchase 15% of all hematite produced from the hematite projects on commercial terms at market rates.

Radar has the right to seek additional and alternative investment partners for all its projects, including the Die Hardy magnetite project.

Radar Iron will be presenting at the upcoming One2One Forum in Sydney on 6 June.

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