Special report: Venture is on track to start iron ore production in the second quarter with full funding for its wet screening plant and first shipment working capital now secured.
The company has received firm commitments from sophisticated, professional and institutional investors to place more than 181 million shares at a price of 5.5 cents each to raise $ 10 million.
This fully funds the development of its Riley iron ore mine in Tasmania, allowing it to complete the final stages of construction and commissioning of the wet screening plant that paves the way for Venture Minerals (ASX: VMS) deliver its first shipment of iron ore.
It is important to note that the placement eliminates the need for the company to finance the plant through debt, which significantly reduces the risks of the project and the potential impact on the company during its transition from explorer. to producer.
Riley has immediately accessible ore reserves of 1.6 Mt at 57 percent iron with low impurities and is primarily a drop-shipping ore deposit with stripping ratios reaching roughly zero.
Although the reserve translates into a relatively short mine life of two years, the price of iron ore is currently around US $ 174.07 per tonne, nearly double the assumption of $ 90. US / t used in the company’s pre-feasibility study in August 2019.
This is likely to significantly improve the already attractive economic conditions, such as an internal rate of return (IRR) of 303% and an after-tax net present value (NPV) of $ 27 million, as well as cash generation. after tax of $ 31 million.
IRR and NPV are measures of the profitability of a project.
Venture notes that the 2021 outlook for iron ore prices remains strong due to continued demand generated by Chinese government infrastructure spending and lingering concerns about Brazil’s supply.
The funds from the placement will also be used for exploration on the company’s Golden Grove North project in Western Australia, where recent drill intersections have returned results of up to 7% zinc, 1.3% copper and 2.1 grams per tonne of gold at Orcus and other powerful electromagnetic conductors along the VMS target area.
Venture will also use the funds at its Kulin Gold Project, which is located in the same emerging gold province as the +30 million ounce Boddington deposit, the 2.2 Moz Edna May deposit, the 1.2 Moz Katanning deposit and the 700,000 oz Tampia project.
He recently launched a minimum 3,000m drill program on the project to test several targets under large mineralized trenches that were dug last year.
This article was developed in conjunction with Venture Minerals, a Stockhead advertiser at the time of publication.
This article does not constitute advice on financial products. You should consider getting independent advice before making any financial decisions.