Havilah Gets US$100 Million Boost for Iron Ore, Copper Assets

In what the company calls a “transformational capital injection,” Havilah Resources (ASX:HAV) has entered a share subscription agreement with Simec Mining to receive up to US$100 million for work program funding.

A member of the GFG Alliance, Simec’s contribution to Havilah will see the latter receive enough funding for work programs at its Maldorky, Grants and Grants Basin iron ore assets, along with the Mutooroo copper deposit and its nearby prospects in South Australia.

The transaction will bring a staged equity investment of US$50 million and an additional US$50 million in conditional or discretionary funding. Havilah will receive the funds over an anticipated three year period as the work programs push the company’s assets to completed definitive feasibility study status; the contribution may also fund exploration as well as corporate and administration costs.

If all expected funding goes to Havilah, GFG will potentially earn a 51 percent stake in the company. Havilah Independent Non-executive Chairman Mark Stewart called the agreement a “strategic alliance” in a statement, with benefits to be gained from both companies.

“The proposed transformational transaction announced today is the culmination of extensive discussions and technical co-operation between Havilah, Simec and GFG since the middle of 2018. This co-operative and patient approach to explore alternatives, test ideas and understand value propositions has paid off with a clear win-win outcome for both parties,” he said.

GFG is currently planning a 10 million tonne per year steel plant called Next-Gen in Whyalla, South Australia; the company bought Whyalla Steelworks in 2017, giving GFG access to significant infrastructure and facilities. GFG is also planning for a potential copper smelter in the same area, and noted that Havilah’s assets could help “potentially feed” the operations with copper and iron ore.

“This investment has the potential to deliver significant iron ore feedstock, reinforcing our ongoing commitment to support the future of Whyalla as a major steel producer. Havilah’s copper projects can also help underpin key feedstock needed for the copper smelter project we are exploring in Whyalla,” commented GFG Executive Chairman Sanjeev Gupta.

Havilah shares were down by 20 percent at the end of trading on Thursday (May 2), closing at AU$0.18.

As of 4:40 a.m. EDT on Thursday, iron ore was trading at US$93.60 per tonne. Meanwhile, as of Wednesday (May 1), copper was trading at US$6,396 per tonne on the London Metal Exchange.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.