Scandinavian Resources acquires iron ore portfolio
THE BOURSE WHISPERER: Scandinavian Resources has acquired a portfolio of nine iron permits from Swedish company Grängesberg Iron AB.
The acquisition was made via the company’s its wholly owned subsidiary Kiruna Iron AB (KIAB).
The portfolio includes the advanced Ekströmsberg iron project and Tjårrojåkka iron-copper project located 45 kilomteres from Kiruna in northern Sweden.
The acquisition combines with KIAB’s existing JORC resources and JORC exploration targets to provide consistency to KIAB’s long term strategy.
KIAB intends to mine iron from a number of 50 million tonne to 100 million tonne iron deposits within the world class Kiruna Iron District and subsequently transport a premium quality magnetite concentrate to the Port of Narvik.
“This is an important strategic transaction for Kiruna Iron AB,” Scandinavian Resources technical director Olof Forslaund said in a company announcement.
“Ekströmsberg and Tjårrojåkka are key iron projects because they add additional tonnage to the portfolio and adjoin our existing iron projects, which are located close to modern infrastructure at Kiruna.
The acquisition also provides us with options in terms of planning future exploration, development and mining activities.
This is critical because the flexibility enables us to align our work programs within the parameters set by the community, landowners, Sami, government and environment.”
The consideration comprises the issue of 8.2 million fully paid ordinary shares in Scandinavian Resources, a US$2 million payment and a 1 per cent Net Smelter Royalty on future production.
Scandinavian will fund the cash component from existing cash reserves and existing facilities.
The payment is payable in three tranches: US$500,000 within 14 days, US$750,000 by
15 August 2011 and US$750,000 by 15 November 2011.
The 8.2 million shares will be issued prior to 30 June 2011 and will be escrowed until 15 August 2011 whereupon fifty per cent will remain in escrow until 15 November 2011.
No shareholder meetings will be required to complete the transaction, which will be effected through the acquisition of 100% of the issued capital in a wholly owned Swedish incorporated subsidiary of Grängesberg Iron AB which owns a 100% unencumbered interest in the permits.
Sale of the permits by GIAB allows it to focus on reopening the historic Grängesberg iron mine in southern Sweden and completing an Initial Public Offering during 2011.