ASX-listed Venture Minerals has jumped on voracious investor appetite for iron ore players to raise $10 million in an equity placement, with the bulk of the funds set to be funnelled into its revived Riley hematite project in north-west Tasmania. The Perth-based company received commitments from sophisticated, professional and institutional investors for the capital raise via the placement of 181.81 million new Venture shares at an issue price of 0.055¢ a share.
Venture says the funds will enable it to complete the final stages of construction and commissioning of the Riley wet screening plant ahead of the planned delivery of its first iron ore shipment from the mine in the June quarter this year. According to the company, Riley’s rapid pathway to production and immediately accessible near-surface ore reserves of 1.6 million tonnes going 57 per cent iron – and 61 per cent calcined – present a unique opportunity to capitalise on the historically high iron ore price and realise early cash flows.
Venture’s timing looks to be on the money, with the iron ore price having soared more than 100 per cent in the past 12 months to a near decade-high of approximately US$170 per tonne. The outlook for the rest of 2021, the company says, remains positive due to continued strong steel demand generated by Chinese Government infrastructure spending and continuing supply concerns from a Coronavirus-ravaged Brazil.
As a result, economics for the low – $6.7 million – CAPEX Riley mining and dry and wet screening operation may be in for a re-examination given the pre-feasibility study, or “PFS” numbers released in August 2019 were based on a spot iron ore price of US$90.35 a tonne for 62 per cent iron material.
While Riley has a short initial mine life of two years, the old PFS shows it spitting out $172.8 million in gross revenue, $37.64 million in EBITDA and a total cash surplus of $30.67 million for the period, with an internal rate of return after tax of 303 per cent, all assuming the US$90 a tonne spot price.
Life-of-mine cash operating costs for Riley have been forecast at an average $56 a tonne and $85.12 per tonne when including shipping costs.
Venture previously began mining at Riley in May 2014 before placing the mine on care and maintenance after suspending operations in August 2014 due to declining iron ore prices.
The latest capital raise now provides full funding for the $3.08 million wet screening plant and first shipment working capital. All long-lead time equipment items have been sourced.
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By Matt Birney
