Fortress Minerals proposes S$9 million placement to fund projects 

IRON ore miner Fortress Minerals : OAJ 0% proposed to place out 23.3 million new shares at S$0.386 apiece, in its bid to raise some S$9 million to fund its mining and exploration projects on late Monday (Mar 20).

The placement price represents a discount of 9.9 per cent to the volume weighted average of S$0.4284. This is for trades done on Mar 16, or the last full market day on which the placement agreement was signed.

While Fortress Minerals said this is within the 10 per cent discount limit as set out by Catalist rules, it is only 0.1 per cent under.

Stirling Coleman Capital has been appointed as the deal’s placement agent.

Out of the expected US$6.5 million of net proceeds raised from its proposed placement, Fortress Minerals intends to use up to 60 per cent or US$3.9 million to further develop its Cermat Aman mine at Mengapur, which commenced production in July 2022.

Specifically, it intends to build a new integrated processing plant to enhance production capabilities at the mine.

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This will enable the production of high-grade iron ore, copper and pyrrhotite concentrate at the mine as part of the group’s effort to grow its business top lines, said Fortress Minerals. It added that such initiatives will continue to propel the company’s pipeline growth and support sustainability of earnings in the long term.

Up to 40 per cent of net proceeds or US$2.6 million will be used to partially fund the group’s exploration efforts in Sabah, in relation to its receipt of two prospecting licences earlier in March.

Exploration of new geographies and minerals under these licences will provide potential to diversify the group’s revenue streams and bolster sustainable growth for the long term, it said.

Assuming that all placement shares are fully subscribed, the new shares issued will represent 4.66 per cent of the company’s existing issued and paid-up capital.

The enlarged base will increase Fortress Minerals’ share base to 523.3 million ordinary shares from 500 million shares previously. The group expects this will improve the trading liquidity of its shares.

For illustrative purposes, the transaction would have resulted in a FY2022 net tangible asset per share of US$0.121, up from US$0.1136 had the deal been completed on Feb 28, 2022.

Earnings per share (EPS) on the enlarged shareholder base would have been US$0.0265 as opposed to the actual FY2022 EPS of US$0.0278.

Shares of Catalist-listed Fortress Minerals ended last Thursday unchanged at S$0.45 before a trading halt was requested on Mar 17. The counter resumes trading on Tuesday.