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ISR says confident of ability to fund commercialisation of mining asset

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The Singapore Exchange Centre in Shenton Way.

ISR Capital said on Tuesday that an estimate for the initial development costs of a mining asset in Madagascar are based on its chairman's industrial experience, and that the company is confident that it has the means to commercialise the project.

In replies to queries by the Singapore Exchange (SGX), the company's directors also provided unqualified confirmation that it was not detrimental to shareholders or the project to waive certain conditions regarding the obtaining of a budget and liquidity plan in order to complete the acquisition of the mining asset.

The queries by SGX came in the wake of ISR announcing on Jan 31 that it was waiving the cash flow budget and liquidity plan condition in order to complete its S$3 million acquisition of a majority stake in Tantalum Holding (Mauritius), which controls an rare-earth exploration licence in Madagascar. The deal has since been completed.

In a number of queries to the company, SGX raised questions about whether waiving the budget and liquidity plan could hurt shareholders or prospects for the company and the mining project. The latest set of questions asked ISR to explain why the cash flow budget and liquidity plan that has been waived is not important, and how the board is safeguarding the interest of shareholders in mitigating the financing risks for the project.

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ISR said that a cash flow and liquidity plan was not the same as a budget for developing the project, and therefore there was no need to obtain an updated one – an earlier budget and liquidity plan that was created in 2016 for the purposes of a loan to the mining project is now updated, ISR said.

ISR chairman Chen Tong, who has worked many years in the mining industry, has however estimated that the cost to complete pilot production, and environmental impact assessment study, feasibility study and project engineering design will come up to about US$10 million to US$15 million.

The company noted that it also has access to S$22 million that can be drawn down from an existing convertible redeemable bond programme. It may also look at other ways of funding, including external borrowings or further fundraising exercises such as share placement, if necessary.

"The board is confident that it is unlikely the company will have to delay, adjust, reduce or abandon the project due to lack of
funding to advance the project, thus safeguarding the interest of the shareholders in the project," the company said.