raised $24m

Aztec Resources (“Aztec” or the “Company”) (Code: AZR), the ASX and AIM listed Iron ore developer, has entered into an Underwriting Agreement to raise A$24,348,375, with significant international investment groups agreeing to take up Aztec options due to expire on 31 January 2005 if the options are not exercised by their existing holders.
On completion, London based mining finance house Cambrian Mining PLC (AIM Code: CBM) will have subscribed for a minimum of A$5.0 million in the issue. Cambrian is a major shareholder in a number of successful resource companies including Western Canadian Coal a metallurgical coal producer in British Columbia and was instrumental in Western Canadian’s C$100 million fund raising for the development of its projects.
Aztec also received significant interest from Australian and European institutions and brokers to the issue, eliminating any possible shortfall from option conversion. The funds raised will assist the company in the development and finance of its Koolan Island Iron Ore Project in Western Australia and for working capital purposes.
The issue will be fully underwritten by Cartesian Capital and Grange Securities subject to standard conditions and sub-underwriting commitments. The new shares issued pursuant to the agreement will rank equally in all respects with existing shares of the company.
Before the Aztec share price rose to 20c last week, reaching the option conversion price, it was expected that many of the options, issued several years ago, would lapse on their expiry date. The underwriting agreement follows the signing of Aztec’s third MOU taking sales to over two thirds of expected production or over 22 million tonnes of iron ore over the life of the mine. MOU’s have now been entered into with China’s MinMetals, Sinom China, and a major Japanese company.
With the total resources currently standing at 39.5 million tonnes at 64.8% Iron ore (Fe) (inclusive of the previously announced Main Pit resource of 24.8Mt at 67% Fe) and work progressing on the Bankable Feasibility Study, Aztec is on track to become an iron ore producer. Further exploration at its Koolan deposit currently underway is aimed at increasing the resources and finalising the BFS.
Aztecs’ CEO Ian Burston commented: “The success of this fund-raising is a major step in providing certainty for the development of our iron ore project and we are excited that a respected London resources company has acknowledged the future potential of Aztec by taking a significant investment in the company.”
The company will pay an underwriting fee of 6% and will issue the joint lead managers and advisers 5 million unlisted options exercisable at 23 cents with half of the options able to be exercised if the share price of Aztec shares trade at no less than 30 cents for 30 consecutive days and the remainder exercisable if the Aztec shares trade at no less than 40 cents for 30 consecutive days.


Background
Aztec has identified a high grade iron ore resource with iron values up to 68% at its Koolan Island Iron Ore project off the Western Australian coast in the Kimberley region, 130km from Derby. The project was previously mined by BHP until 1993 producing 68 million tonnes of high grade and low impurity ore. Current resource estimate at the main pit and satellite ore bodies stands at 39.5 million tonnes of high grade ore at 64.8% Fe (JORC indicated 19.4mt and inferred 20.1mt as reported to the ASX on 25 October 2004). Aztec is conducting drilling along previously untested 12km strike extensions of existing deposits so as to increase current resources and to complete the Bankable Feasibility Study. Aztec aims to produce 2 – 3mt of iron ore per annum at Koolan for export to Chinese and Japanese markets.