Baobab Resources sells shares to fund mining projects in Mozambique

15 October 2013

Redbird Investments, a subsidiary of African Minerals Exploration & Development SICAR SCA, is set to buy 5 million shares in Australian mining company Baobab Resources, under the terms of a contract announced last week.

Issuing these shares will provide Baobab Resources with a cash injection, before costs, of 750,000 pounds, which it plans to use to conclude final feasibility studies for its pig iron project in Mozambique.

The company plans to produce pig iron with low levels of impurities from iron ore deposits in Tenge/Ruoni in the central Mozambican province of Tete as well as thermal coal, and expects to produce 2 million tons of pig iron per year.

Once this financial operation is concluded, Redbird Investments will have 26.8 percent voting rights in Baobab Resources compared to 26.73 percent at the moment.

The companies also agreed to place another 8.5 million shares with Redbird Investments, which needs shareholder approval and would provide Baobab with 1.275 billion pounds before expenses.

Under the terms of the contract that was signed, Redbird Investments will also be given an option to subscribe up to 27 million ordinary shares, increasing its stake in the company to 37.85 percent. (macauhub)