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MZI Resources Secures Argonaut Capital To Underwrite $3M SPP

MZI Resources (ASX: MZI) has received a vote of confidence in its Keysbrook mineral sands project in Western Australia with investment house Argonaut Capital Limited agreeing to underwrite its $3 million share purchase plan.

The underwriting agreement follows on highly regarded resources private equity fund Resource Capital Fund (RCF) taking up a 12% stake in the company through a $3 million share placement.

MZI chief executive officer Trevor Matthews said the company was delighted to secure Argonaut's support.

The underwriting agreement includes a minimum subscription by Argonaut or its nominees of $500,000, which Matthews said would ensure the company received the full $3 million from the SPP.

Argonaut, which is based in Perth and Hong Kong and has an established track record in the natural resource sector, will also work with MZI in a number of areas to assist the company to maximise shareholder value

The underwriting agreement is subject to RCF proceeding with a proposed funding package to underpin development Keysbrook. Discussions between MZI and RCF are currently underway.

Under the share purchase plan, shareholders can subscribe for up to $15,000 worth of new shares priced at $0.01296 each.

Proceeds from both the share placement and the RCF placement will help the company progress development of Keysbrook.

MZI remains in discussions with RCF concerning the funding package that will help underpin development of the project.

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

Securing an underwriter for its Share Purchase Plan after snaring a cornerstone investor in RCF highlights the attractiveness of MZI Resources' flagship Keysbrook project.

Along with the proposed RCF funding package to underpin development, the company is also moving towards finalisation of project finance debt facilities with its two mandated Joint Lead Arranger banks.

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