The board of Dynasty Metals has accepted an offer from Chinese steel producer, Hebei XingHua Iron and Steel, to take a 34 per cent stake in the company.
The board of Dynasty Metals has accepted an offer from Chinese steel producer, Hebei XingHua Iron and Steel, to take a 34 per cent stake in the company.
The offer comprises a placement of 40 million new shares in Dynasty at 16 cents each to raise $6.4 million.
The offer also has the provision for the issue of 20 million options with an exercise price of 20 cents per option and an expiry date of 31 December 2012.
If the offer is accepted by shareholders Dynasty's cash position will be approximately $10 million.
"The letter of offer from a significant Chinese Steel producer, XingHua, is a strong endorsement of Dynasty's investment attractions. This strategic partnership will provide a strong foundation to support the enhancement of project assets and corporate growth," said Dynasty chairman, Ian Levy.
"XingHua's decision to invest in Dynasty reflects the significant potential presented by the Company's project portfolio, and the calibre of the Pilbara as one of the world's leading Iron Ore provinces," he said.
Mr Levy said that Dynasty is continuing to build on the established 453 million tonne inferred JORC resource in its current drilling program, and pending shareholder approval, the placement to XingHua will enable the company to further expedite exploration activities and pre feasibility studies.
Full company statement below:
The Directors of Dynasty Metals Australia Limited (ASX: DMA) are pleased to announce that the company has received a letter of offer from the Chinese steel producer Hebei XingHua Iron and Steel Co. Ltd ("XingHua"), a subsidiary of XingHua Industrial Company. The Dynasty Board has accepted the letter of offer, which is subject to shareholder, regulatory and Government approvals.
The offer comprises a placement to XingHua of 40,000,000 new shares in Dynasty at a price of $0.16/share to raise AUD$6,400,000. In addition, the offer makes provision for the issue of 20,000,000 options with an exercise price of $0.20/option and an expiry date of 31 December 2012. The new shares will be placed on voluntary escrow for 12 months from the date of issue. Subject to shareholder and other approvals, XingHua will have a 34% interest in the company and Dynasty's cash position will be approximately $10 million.
Dynasty Chairman, Ian Levy said; "The letter of offer from a significant Chinese Steel producer, XingHua, is a strong endorsement of Dynasty's investment attractions. This strategic partnership will provide a strong foundation to support the enhancement of project assets and corporate growth.
XingHua's decision to invest in Dynasty reflects the significant potential presented by the Company's project portfolio, and the calibre of the Pilbara as one of the world's leading Iron Ore provinces. XingHua views Dynasty as an attractive and undervalued investment opportunity backed by a strong board and team of leading technical consultants, and will support both development and commercialisation of our projects through potential off take.
Dynasty continues to build on the established 453 million tonne inferred JORC resource in its current drilling program, and pending shareholder approval, the placement to XingHua will enable the company to further expedite exploration activities and pre feasibility studies."
XingHua - Dynasty Relationship:
Dynasty and XingHua have negotiated the key terms of a relationship agreement as follows:
1. XingHua will be closely involved in the management of the Company and the exploration and evaluation of all projects. This will include the appointment of two XingHua representatives to the board of Dynasty.
2. XingHua will share an office with Dynasty in Sydney where XingHua may undertake business when XingHua representatives are in Australia.
3. XingHua will invest in a representative office in China for Dynasty and will assist with introductions to potential 3rd party iron ore infrastructure providers. XingHua accepts that Dynasty will retain the right to freely progress discussions with other suitable infrastructure providers to ensure access to infrastructure is secured.
4. To the extent of its iron ore requirements, XingHua has a priority for iron ore off-take based on normal commercial terms.
5. With respect to production surplus to XingHua's requirements, XingHua will assist Dynasty to progress discussions with other steel producers and Dynasty will retain the right to enter into negotiations with other 3rd party off-take parties for the remainder of the iron ore.
These arrangements provide for both immediate and future financial support, and ensure XingHua will be directly involved in the management of the company, will assist with future funding and infrastructure needs, and it will also operate its iron, coal and steel trading activities alongside Dynasty in our Sydney office.
Dynasty Executive Director, Malcolm Carson added: "Through Dynasty's representative office in China provided by XingHua, we will have a presence in China, a highly respected and well connected relationship partner, a basis on which to establish iron ore off-take arrangements, high level introductions and access to Hebei steel mills producing 20 million tonnes per annum steel and requiring in excess of 30 million tonnes per annum of iron ore."
