AusQuest shareholders approve part sale to US giant CliffsFont Size: Decrease Increase Print Page: Print Cath Hart | November 20, 2008 Article from: The Australian SHAREHOLDERS in junior nickel and gold explorer AusQuest have approved a 30 per cent sale to US mining giant Cliffs Natural Resources.
In a difficult environment for raising equity, the $26 million placement boosts AusQuest's coffers and expands Cliffs' footprint in Western Australia after it completed a takeover of iron ore miner Portman earlier this month.
The deal would allow AusQuest to increase exploration on its projects in the Pilbara and to move ahead with its Diamantina Iron Oxide Copper Mine in Queensland, the company said, after shareholders signed off on the transaction at the annual general meeting. Cliffs -- North America's largest iron ore pellet producer -- will subscribe to 68.3 million AusQuest shares at 40c and 26.5 million options at exercise price of 40c in a placement slated for completion by the middle of next week.
AusQuest managing director Graeme Drew said the company was "very fortunate" to have secured the support of a major mining house in the current environment. The deal will lift the company's cash resources to about $30 million.
"In addition, with the support and backing of Cliffs, we intend to aggressively target strategic opportunities in the resource sector in Australia, where many new projects and opportunities will emerge in the next six to 12 months," Mr Drew said. "AusQuest is well placed to actively evaluate new opportunities and we will be targeting advance exploration projects with substantial potential.
"Our focus will be major commodities such as manganese, iron, copper, zinc, nickel and gold, preferably in Australia, but also offshore." Hartley resource analyst Andrew Muir, who rates AusQuest a speculative buy, said most of the company's projects had "very large scale potential".
"AusQuest is now well cashed up to progress exploration on all its projects," he said.
Approval of the deal came just days after Cliffs' proposed $2.7 billion takeover of coal producer Alpha Natural Resources was terminated because of uncertainty in the steel industry and the sinking US economy.
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