Ann: Crusader attracts IFC as a potential Shareho, page-13

re: Ann: Crusader attracts IFC as a potential... Don't think anyone has posted this yet, an article in the Australian about IFC's investment into Crusader.

http://www.theaustralian.com.au/business/opinion/crusaders-golden-future/story-fnciil7d-1226898726740#

Crusader’s golden future

BARRY FITZGERALD
The Australian
April 29, 2014 12:00AM

Numbers on Crusader. Source: TheAustralian

CRUSADER RESOURCES (CAS)

BRAZIL is about to host the World Cup soccer extravaganza, and has the summer Olympics as a follow up act in 2016. Still, the country still ranks as a developing nation where a huge task remains to lift the bulk of the population out of poverty.

The International Finance Corporation, the World Bank’s private sector development arm which has the aim of stamping out global poverty by 2030 no less, is on the case.

Small steps are part of its strategy and its latest move is to team up with ASX-listed junior Crusader Resources.

The Perth-based Crusader is already doing its Brazilian bit by producing iron ore at its domestic market-focused Posse project in Brazil’s Minas Gerais state. It has become a nice little earner too, since first sales were made in March last year.

Today’s expected release of the group’s March quarter production report will contain the hard numbers. But it can be assumed that Posse is good for providing monthly free cashflow to Crusader of about $1 million, with growth options.

That’s not bad for a company valued by the market at about $34m. However, it is Crusader’s Borborema gold project in the northeast of Brazil, about 130km inland from the coastal prosperity of sugar cane and tourism, that has the IFC’s interest.

Borborema was previously Crusader’s flagship project. It is a 1.6 million ounce mining reserve that will require $US200m to $US250m in development capital to get into production. That was doable in a higher-gold-price environment but has become something of a challenge for a company the size of Crusader in the lower-price environment.

Even so, it is Borborema’s job and wealth-creation potential for the impoverished inner northeast of the country that has seen the men from IFC arrive. Under a deal that needs final approvals before being sealed, the IFC plans to inject $7m into Crusader — $4m for a 9 per cent equity stake in the company and eventually, up to $3m for long-dated options.

Crusader was cagey on the price to be paid, but it is assumed the shares will be issued at a perfectly reasonable 10 per cent premium to Crusader’s pre-announcement price of 26c a share, and the options are likely to be for four or five years at an exercise price north of 40c a share.

While Posse means Crusader is already self-funded in Brazil, the new funding will allow it to get on with its work aimed at sweetening up the economics of a Borborema development so the project doesn’t have to wait for higher gold prices. That means stepping away from the deposit to take in the barely scratched regional potential, with gold long overlooked because of the long history of tungsten mining.

Crusader’s iron producer status in the country, and the tacit endorsement of its activities there by the IFC, also mean new opportunities will increasingly be presented to it by other foreign companies with interesting gold/iron ore opportunities, but without the track record to follow them through. That in particular will be worth watching unfold in the months ahead.