Strategic Natural Resources raises new cash to fund development work at Elitheni

Thursday, Aug 25 2011 by
1
Strategic Natural Resources raises new cash to fund development work at Elitheni

Strategic Natural Resources (LON:SNRP), the AIM listed mining company behind the development of the Elitheni coal project in South Africa, has raised £1.9 million in a placing of 10 million shares priced at 19p each. The shares were all subscribed for by Cooch 1095, Strategic’s largest shareholder and the company nominated by its Black Economic Empowerment Partner, Rapitrade.

The placing will be completed in two tranches over the next two weeks and comes at a premium of 38 percent over Strategic’s closing share price of 13.75p yesterday. Broker Evolution Securities said that while the cash boost was not enough to bring Elitheni into production, the move would allow the company to procure long lead capital items. Shares in Strategic responded with an 18.25% rise to 16.25p.

In April, Strategic signed an off-take agreement with Swiss based steel supplier and commodity trader Trasteel International SA, which will buy up to an initial 2.0 million tonnes of Elitheni coal. The first shipment under the contract will be loaded in June 2012, with around 500,000 tonnes of coal scheduled to be shipped during the following twelve months.

David Nel, the chief executive of Strategic, said: “We are very grateful for the continuing support of Cooch, demonstrated by the fact that this subscription is at a substantial premium to the current share price. The net proceeds of the placing will ensure that we are able to procure long lead items that are required to enable the delivery of our first tonnes to Trasteel. The company continues to develop its longer term financing strategy and, as reported in the chairman's statement in the company's annual report, we expect to be in a position to make an announcement updating shareholders on our financing plan in the near future. This interim placing of £1.9 million merely ensures that we will not lose momentum in terms of our commitments to Trasteel.”


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