Venus Resources soars on deal with Shandong's HD Mining.
CITY BEAT: Michael Bennet From: The Australian January 25, 2010 12:32PM
SHARES in Perth-based Venues Resources shot up more than 65 per cent today after the junior announced a binding agreement with China's state-owned Shandong Provincial Bureau of Geology and Mineral Resources (SDGM).
Venus, which had been in trading halt since last Wednesday, said it would issue Shandong subsidiary HD Mining 2 million shares at $2 each to raise $4 million.
Chinas confidence in the miner - the placement is at a massive premium to Venuss closing price at 60c on Friday - sent Venuss shares to a 52-week high of $1 before cooling to 83c in intraday trade.
If approved, the placement would give Shandong about a 6.5 per cent stake in Venus. Shandong also paid a premium for a 13 per cent stake in fellow Perth miner Bauxite Resources, which was approved by the Foreign Investment Review Board last year. Venus will also seek FIRB approval for Shandongs investment and be forced to repay a $2m deposit already received if the approval isnt granted within 60 days. But should Shandong not win Chinese government approval within the same time frame, Venus can keep the cash.
Investors liked the finer points of the agreement, which will see Shandong invest $8m over two years in the miners Yalgoo iron ore exploration tenements, to earn a 50 per cent stake in the project. The agreement only covers iron ore, with Venus to lay claim to any other minerals found so long as they are not discovered in association with any iron ore mineralisation.
Yalgoo is located to the south of Gindalbies $1.8 billion Karara project in Western Australias iron ore rich mid-west region; Gindalbie is in a joint venture with Chinas Ansteel, which got the governmental green light in September. Treasurer Wayne Swan in May 2009 year approved Ansteels proposal to buy a 36.28 per cent stake in Gindalbie, but wont be required to do the same with Venuss transaction because it would sit below the 15 per cent threshold.
