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Mindax to raise up to A$7.57m from partially underwritten rights issue

Mindax (ASX: MDX) has revised the terms of its pro-rata rights issue first proposed on April 14 after consultation with the company's advisers and consideration of current market conditions.

The rights issue seeks to raise A$7,575,000 through a renounceable offer of one new share for every five shares held on the record date of 18 July 2011 at $0.25 per share, together with one free attaching new "piggyback" option for every new share issued.

The funds will be used to progress exploration and development of the company's Mt Forrest Iron Project, particularly the direct shipping ore (DSO) component.

The rights issue has been partially underwritten by Patersons Securities up to $4.75 million and investor Ms Lei You will sub-underwrite up to 50% of any shortfall.

Mindax's Mt Forrest Iron Project in the Central Yilgarn Iron Province of Western Australia is progressing through development with a view to moving towards a mining phase.

The company is putting in place necessary approvals and aligning infrastructure partners including rail and port.

On May 11 Mindax upped the ante at the project by finding mag-hematite mineralisation overlying the primary magnetite resources.

The importance of this find was significant as it will likely have a positive impact on the Mt Forrest project with earlier startup and earlier bonus cashflows now targeted for the second half of 2013.

The Mt Forrest Iron Project is located 150 kilometres northwest of the town of Menzies and has a shallow JORC Indicated and Inferred mag-hematite resource of 19 million tonnes (Mt) at 42.30% iron (Fe) with low phosphorous content.

There is an additional exploration target of mag-hematite mineralisation of 15Mt to 30 Mt at an expected grade of 42% to 58% Fe and it is beneficiable to DSO equivalent product on preliminary metallurgical advice.

Mindax aims to quantify a strong business case within the scoping study for a 30 year mine life and likely advancing the project directly to a Prefeasibility Study.

An initial DSO operation could exploit 4.5 million tonnes at 54% with just under 66% already in the indicated category. The DSO could be a handy early cash flow earner for the project.

The underwriting of the rights issue includes a commitment from Gilbert George (a non-executive director of Mindax) to sub-underwrite up to 1 million securities of any shortfall.

Andrew Tsang, also a non-executive director of Mindax, intends to take up his own entitlement of 6,446,022 new shares and new options in full, representing 21.27% of the rights issue.

The new shares will rank equally in all respect from the date of allotment with the existing class of quoted ordinary shares.

The new options will represent a new class of options and will comprise a primary option with an exercise price of $0.30 that will be exercisable during April 2012, expiring on 30 April 2012.

The new option is exercisable into one ordinary share and also one secondary option with an exercise price of $0.35 cents and an expiry date of 31 May 2015.