Richmond Mining (ASX: RHM) has received a major vote of confidence in the company's operations from institutional and sophisticated investors, with applications for the current placement oversubscribed.
Richmond offered 14.1 million shares at $0.32 to raise around $4.5 million, with the company expecting to allot the shares under the placement on Friday 5 August 2011.
The oversubscription by the larger investors will no doubt provide a boost for retail investors, as all existing shareholders have been offered a share purchase plan for an additional parcel of up to $15,000 worth.
The offer has the potential to provide an additional capital injection for Richmond.
The company is actively pursuing project finance for the development of Buena Vista iron project in Nevada, U.S., with the new funds to be applied towards the outstanding balance of US$2,812,500 for the acquisition of three rod mills.
Funds will also be used as general working capital at the project, that will be directed towards both securing the remaining Buena Vista permits and the undertaking of detailed engineering design work as a precursor to finalising the project’s EPC contract.
Richmond last month received some positive news at Buena Vista, with a Feasibility Study at the West Deposit delivering:
- Capital cost of US$161 million;
- IRR of 41% (using a conservative average FOB concentrate price for the initial 10 years of US$110);
- Average annual high grade iron ore concentrate production of 1.75 million wet metric tonnes grading 67.5% total iron, with very low impurities over an initial 10 year mine life;
- Free after tax cash flow of US$476 million from the first 10 years of operations; and
- First concentrate delivery targeted for December quarter 2012.