Ironveld (IRON) jumps over 50%: Is this penny share still a good buy?

Highlights

  • AIM-listed firm Ironveld shares jumped over 50 per cent today.
  • The company closed a major investment agreement with natural resource company Grosvenor Resource worth £5.6 million via subscription.

AIM-listed exploration and development company Ironveld PLC’s (LON: IRON) shares skyrocketed over 50 per cent today after the company closed a major investment agreement with natural resource company Grosvenor Resource.

Ironveld PLC’s (LON: IRON) share price performance

Ironveld’s shares were trading at GBX 0.93, up by 51.64 per cent on 22 October 21 at 13:50 hrs BST. Comparatively, the FTSE AIM All-Share index was trading at 1,236.50, down by 0.39 per cent.

IRON’s shares price and volume

(Image source: Refinitiv)

The company’s market cap stands at £8.03 million and has given a year-to-date return of 79.77 per cent as of 22 October 21.

 Ironveld’s new investment

The company said today that Grosvenor would invest £5.6 million in Ironveld via a subscription, subject to shareholders approval at an Ironveld general meeting.

The subscription will include issuing 561.505 million new ordinary shares with a subscription price of 1.0 pence per share to Grosvenor.

The price of 1.0 pence per subscription share equates to a premium of 90.5 per cent to Ironveld’s mid-market price of 0.525 pence per share, as of 29 March 2021, the last trading day before the company reported it was in discussions which could result in a potential deal.

The net proceeds from the subscription will be used to help with the company’s project funding and also help cover any corporate expenses and overheads associated with the new Mining Right application for Ironveld’s subsidiary, Luge Prospecting and Mining Ltd.

Also, the company said the subscription would help Ironveld onboard a credible and serious partner to help steer the firm’s strategy.

Both the companies have agreed to nominate two non-executive directors to Ironveld's board after the subscription is complete.

Grosvenor Resource Corp, which is a new company based in South Africa, has been founded by young black entrepreneurs with the goal of developing higher value and vertically integrated projects. The company aims to expand their operations beyond the bulk commodities sub-sector in the region.

Bottom Line

AIM stocks are usually high growth investment options, but they also carry a higher risk; thus investors should also consider the risk factors involved prior to investing in such stocks.

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