Batavia Mining (ASX: BTV) is in the process of completing a A$9.6 million capital raising through two share placements to underpin the exploration and evaluation of the Roper River Iron Ore Project in the Northern Territory.
Batavia has completed the first share placement, comprising 20 million ordinary shares and 10 million options, raising A$4.8 million before issue costs.
The placement, which was oversubscribed, was strongly supported by existing and new Australian and overseas investors, including clients of Patersons Securities Limited.
In addition, the company has entered into a Subscription Agreement with a leading Chinese steel group, Jiangyin Huaxi Steel Co Ltd, for the issue of a further 20 million ordinary shares and 10 million options to raise an additional A$4.8 million before issue costs.
The placement to Jiangyin Huaxi Steel is subject to Batavia shareholder approval.
Batavia has also signed a Heads of Agreement with Jiangyin Huaxi Steel for potential offtake arrangements for 1 million tonnes per annum for a period of five years.
Batavia Interim CEO, Greg Bittar, said “the company is delighted with the support received from existing and new shareholders and is very excited about the opportunity presented by the Roper River Iron Ore Project."
"Field evaluation and exploration programs which will include trenching and drilling are scheduled to start within weeks as part of our overall strategy of accelerating the evaluation and development of the project."
“The agreements signed with Jiangyin Huaxi Steel also signal the start of a long-term strategic partnership between the two companies,” Bittar added.
A number of other parties have recently expressed an interest in the Roper River Iron Ore Project. All discussions with such third parties are at an early stage and have not involved the negotiation of commercial terms.
The funds raised from the placements will be used for working capital purposes.
These include the funding of a field exploration program at the Roper River Iron Ore Project, commencing with low-level airborne surveys, geological mapping and sampling, as well as trenching and drilling at the highest priority targets in conjunction with metallurgical, logistical and environmental studies.
The Roper River Iron Ore Project is located 425km south-east of Darwin, where it adjoins a major emerging iron ore project currently being explored and developed by Western Desert Resources and ITOCHU Corporation of Japan.
Batavia considers that historical exploration by BHP, which identified 28 iron ore prospects, underpins an Exploration Target of 400-500Mt grading above 40% Fe, including an exploration target of 80-150Mt of potential Direct Shipping Ore (DSO) grading between 50% and 60% Fe.
The potential and targeted DSO is subject to successful completion of geological, metallurgical and economic feasibility studies, all of which are still to be completed.
Batavia is targeting an initial JORC resource for the Roper River Iron Ore Project by the third quarter of 2010. A Scoping Study on the potential DSO will also be based on a targeted production rate commencing at 2Mtpa by 2012 increasing subsequently to 5Mtpa.
The company anticipates that the Roper River Iron Ore Project will be able to utilise existing infrastructure facilities, including the Adelaide-to-Darwin railway line, which lies 100km to the east, and the Darwin Port.
Initial discussions are underway with a view to securing access to existing Rail and Port capacity, giving Batavia cost effective access to key Asian iron ore markets.
Longer term development opportunities and production growth will depend on the completion of more extensive geological and economic studies, as well as on the development of additional port and associated infrastructure, including the further development/expansion of Darwin Port or development of port and other infrastructure at Maria Island in the Gulf of Carpentaria.
In 2009, Batavia entered into an option to acquire 100% of the Roper River Iron Ore Project and has until 29 July 2010 to determine whether to exercise this option.
Due diligence on the project is progressing well and is on track to allow the Company to work towards seeking shareholder approval for, and exercising its option to acquire, the project in July.
Following completion of the two share placements, Batavia will have approximately 153 million ordinary shares and 100.8 million options on issue and have cash, investments and receivables of approximately A$28 million.
Disclosure: The author holds no positions in the company