Anglesey Mining (LON:AYM) announced that its 33 percent owned associate Labrador iron Mines (TSE:LIM) is preparing to raise funds to advance its iron ore projects in Canada.
Investors welcomed the news as shares in Anglesey rose four percent to 26.5 pence, valuing the group at £42 million.
This morning, Anglesey told investors that LIM has filed a prospectus in connection with an overnight public offering of its shares.
The fundraising will be conducted by a group of underwriters led by broker Canaccord Genuity.
“The offering will be priced in the context of the market with final terms of the offering to be determined at the time of pricing,” LIM said in today’s statement.
The proceeds will be used for upgrades and expansion of LIM's Silver Yards processing plant, development of the Houston project, which is currently undergoing environmental assessment and planning, and further exploration at its mineral properties.
LIM will grant the underwriters an overallotment option for additional common shares equalling 15 percent of the underwritten shares.
Earlier this month, LIM further de-risked its Schefferville projects by reaching a participation agreement with a First Nation, which gave their consent to the Schefferville, covering their entire life of mine.
The announcement came just two days after Anglesey announced a new marketing deal for Schefferville iron ore production.
Through the deal Rio Tinto’s Iron Ore Company of Canada (IOC) will again facilitate the sale of LIM’s iron ore into Asian markets.
Around 412,000 tonnes of iron ore was sold on LIM’s behalf through a similar arrangement last year.
After the First Nation agreement was signed, Ambiran Partners repeated its ‘buy’ recommendation and 92 price target on the stock.
“This continues LIM’s recent run of announcements that further de-risk its iron ore projects as it removes the potential for disruption to the operations going forward. This is especially significant given that a local Innu tribe blocked access to the project for a short time in June 2010.”
Ambrian remains upbeat on Anglesey’s prospects and expects significant newsflow going forward to come from drilling of its Parys Mountain property, where results are expected in the first quarter and where the ramp-up is continuing.