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Highlights:
- Magnetite Mines Ltd (ASX:MGT) has arranged up to $7 million in funding from US-based investment funds to advance the Razorback Iron Project.
- Funds will be directed toward critical milestones, including lodging a Mining Lease Proposal and advancing strategic partnerships.
- The funding is structured as unsecured convertible notes with flexible terms, enabling Magnetite Mines to progress its flagship project.
Magnetite Mines Ltd (ASX:MGT) has finalized a funding agreement worth up to $7 million with two investment funds managed by C/M Capital Partners, LP. These funds will play a pivotal role in advancing the company’s flagship Razorback Iron Project, a large-scale magnetite resource poised for global significance. The capital injection will enable Magnetite Mines to progress key milestones, including regulatory approvals, feasibility studies, and strategic partnership negotiations.
The funding is being provided through unsecured convertible notes, with the first tranche of $1.2 million expected within 15 business days. The second tranche of $1.3 million will require shareholder approval at an Extraordinary General Meeting (EGM) scheduled by March 15, 2025. Additional tranches, amounting to $4.5 million, may follow based on mutual agreement and regulatory approvals. The notes are designed with investor-friendly terms, including a nil interest rate, a 24-month maturity period, and an option for conversion into shares based on volume-weighted average price (VWAP). C/M Capital’s ownership will be capped at 9.99% of Magnetite Mines’ issued share capital.
Strategic Allocation of Funds
The funds will be strategically allocated to ensure steady progress in developing the Razorback Iron Project. A key portion will be directed toward submitting the Razorback Mining Lease Proposal (MLP) to the South Australian Government. This comprehensive document, which represents years of preparation, requires a submission fee of $560,000 and will initiate the formal state government approvals process for the project.
Additional capital will be used to strengthen negotiations with strategic partners, including JFE Shoji Australia, under the Heads of Agreement announced in July 2024. Magnetite Mines is also in discussions with other potential co-investors to secure a long-term framework for the project’s development. The funds will further support the definitive feasibility study (DFS) and other preparatory work necessary to achieve a final investment decision (FID).
Significance of Razorback
The Razorback Iron Project is emerging as a critical asset for Magnetite Mines. Positioned as a low-cost, multi-decade magnetite resource, the project aligns with the increasing global demand for high-grade iron ore. C/M Capital’s managing partner, Jonathan Juchno, highlighted the strategic potential of the Razorback resource, emphasizing its undervaluation relative to its long-term prospects.
With high-grade iron ore products gaining prominence due to their environmental and efficiency benefits, the Razorback Project is positioned to play a significant role in the iron ore market. The funding agreement with C/M Capital underscores the confidence in Magnetite Mines’ management team and the project’s ability to reach key milestones in the coming months.
Funding Structure and Key Terms
The funding agreement consists of three tranches:
- First Tranche: $1.2 million in convertible notes with a face value of $1.296 million, expected within 15 business days.
- Second Tranche: $1.3 million in convertible notes with a face value of $1.404 million, subject to shareholder approval at the EGM by March 15, 2025.
- Subsequent Tranches: Up to $4.5 million in additional convertible notes, contingent on mutual agreement and regulatory compliance.
The facility includes customary protections for investors while maintaining flexibility for Magnetite Mines to pursue additional funding sources.
Next Steps
Magnetite Mines is preparing for an EGM to seek shareholder approval for the issuance of the second tranche of convertible notes and future funding tranches. This meeting will be a critical step in ensuring the company can maintain its development momentum.
The Razorback Iron Project is entering a transformative phase, with funding from C/M Capital providing the necessary resources to complete regulatory submissions and advance partnerships. This positions Magnetite Mines to meet critical milestones and capitalize on the growing demand for premium iron ore products.
With strong investor backing and a clear roadmap, the Razorback Project is set to make significant strides in the iron ore sector, underscoring its importance as a key player in global resource markets.
