lynas in funding talks after chinese deal aban

http://www.miningnews.net/StoryView.asp?StoryID=1036856

Colin Jacoby
Friday, 25 September 2009

LYNAS Corporation has suspended its shares ahead of an update on funding discussions after China Nonferrous Metal Mining called off its proposed $A500 million funding deal with the rare earths hopeful.



Rare earth oxides

Yesterday, Sydney-based Lynas said the CNMC transaction was abandoned after Australia’s Foreign Investment Review Board demanded CNMC reduce its proposed ownership to below 50% and decrease the number of board positions to be held by CNMC to less than half the board.

These demands were in addition to already agreed undertakings between Lynas and CNMC aimed at ensuring independent director control of all marketing of rare earths products.

However, Lynas said that despite the termination of the transaction, it was well advanced in finalising interim funding to ensure it had adequate working capital.

Lynas has requested a suspension of its securities pending an update on discussions over potential funding transactions.

The company expects the suspension to last for five trading days.

FIRB had kept Lynas waiting on an approval decision, twice asking CNMC to resubmit its application.

The current 30-day time period for FIRB’s decision was due to expire next week.

In May, Lynas announced state-owned CNMC would look to invest around $500 million in the company to take a 51.6% stake.

The deal included the issue of 700 million new shares to raise $252 million while a guaranteed loan facility would make up the balance.

Funds from the proposed deal were to be used to develop the first phase of the 10,500 tonne per annum rare earths operation at the Mount Weld project, near Laverton in Western Australia. The project was suspended in February due to funding problems.

Lynas currently has $A7.5 million cash at bank.

MiningNews.net was unable to get further comment from Lynas prior to publication.

Prior to entering a trading halt, Lynas shares were trading at A90c.