July 20, 2008

Sandfire to place shares with POSCO

Sandfire Resources NL has finalized agreements with POSCO Australia Limited, under which POSCO Australia will acquire a 19.99% stake in Sandfire through a proposed share placement. The placement is comprised of 16.5 million fully paid shares at 40 cents each and 2.5 million partly paid ordinary shares at 25 cents a piece.
The companies have also agreed to a commercial agreement through which POSCO Australia or its nominated affiliates would have the right to purchase up to 30% of Sandfire’s future mineral production on commercial terms. In addition to the commercial arrangements, a provision has been made for POSCO Australia to nominate its representative to be appointed to the Sandfire board.

Sandifre said deal would provide it with an immediate AUD 7.2 million cash injection as well as the financial backing and strategic marketing, technical and corporate support. It said “This will enable Sandfire to accelerate the exploration of its high quality diversified portfolio of manganese, lead zinc silver, iron ore and gold projects in Australia, as well as position the Company to take advantage of additional resource opportunities, both in Australia and overseas.”

More specifically, Sandfire said the funds would allow continued exploration at the Borroloola Lead-Zinc Project in the Northern Territory, further drilling to establish a JORC Code compliant resource estimate at the Doolgunna Iron Ore Project, and ongoing exploration at the Doolgunna Gold Project.

The transaction still needs approval from Australia's Foreign Investment Review Board government agency, which has been inundated with applications by Asian firms looking to invest in Australian mining.