IronClad Mining (ASX: IFE) has received a major vote of confidence in the company's operations from Cygnet Capital, with an underwriting agreement signed for around three quarters of the 16.33 million April 2012 company options.
The agreement with Cygnet is to underwrite the conversion of up to 12 million of all remaining IronClad listed options priced at $0.75 each, ensuring the company receives guaranteed gross proceeds of $9 million.
IronClad issued 16.33million options April 2012, which expire at 5pm today (Friday, 30 March 2012), and which if fully exercised, will raise a total of $12.2 million, pre broker fees (including the $9 million underwritten by Cygnet Capital).
At 3pm EST today, IronClad was trading comfortably above the exercise price at $0.82.
IronClad said that the funds will be allocated to continue the ongoing development of the company's Wilcherry Hill iron ore mine on South Australia's Eyre Peninsula. (IronClad's joint venture partner Trafford Resources has already exercised all of its 1.2 million options into fully paid ordinary shares.)
Pre-production and grade control drilling are underway at Wilcherry Hill, along with fabrication of the Dry Magnetic Separation plant.
IronClad is developing an independent end to end operating business system, including the mine, processing plant and utilities, supply-chain logistics and export facilities at Lucky Bay.
In stage one, Wilcherry Hill will produce 1 million tonnes per annum of Direct Shipping Ore magnetite, with an increase to 2 million tonnes per annum from the second year of operation.
Stage two of the project will see production increase to between 4 and 5 million tonnes per annum, combining Wilcherry Hill magnetite concentrate with the DSO product.
Sale contracts have been established for the first two years of production from Wilcherry Hill, and 50% of production from years three and four.