Avanti Mining (TSX-V: AVT) said Wednesday that it is planning on partnering with Korean specialty steel producer SeAH Holdings Corp for one of its projects, in a deal that will see SeAH initially take an approximate 11% stake in Avanti.
Under the terms of the alliance between the two companies, Avanti will first complete a private placement with SeAH of 43.65 million shares at $0.252 per share, for proceeds of around $11.0 million. The shares represent a 10.7% interest in Avanti.
Avanti said these funds will be used to finance detailed design engineering, environmental assessment and permitting for the company's Kitsault molybdenum mine in British Columbia.
Following the private placement, Avanti and SeAH will enter into an agreement that will allow SeAH to acquire up to 30% interest in the Kitsault project, expected to close early in the new year. The companies said the value of the interest will be negotiated based on the results of Kitsault's feasibility study announced last week.
"Attracting a partner who is a sophisticated consumer of molybdenum not only validates the technical attributes of Kitsault, it moves us closer to sourcing the necessary capital to develop the Kitsault mine. This will also augment our debt financing efforts that are underway," said CFO of Avanti, A.J. Ali.
SeAH Besteel Corp., the largest subsidiary of SeAH, produces automotive parts and shipbuilding parts for global automakers and shipbuilders.
Separately, Avanti also announced today that it has appointed D&D Securities as its agent for a flow-through share private placement, which will see the company raise up to $4.0 million. These funds will also be used for expenditures on the Kitsault property.
Both the flow-through offering and the SeAH investment are expected to close before year-end, subject to regulatory approvals.