SHERWIN IRON LTD Sherwin Iron Limited (Company) provides the following update on matters relating to its operations and funding:
The Company has completed the mining of the bulk sample, and will make a further shipment in late June 2014. Given the low iron ore price, the Company's stockpile will then remain on-site in anticipation of further shipments, expected in 2H 2014. This will minimise the Company's cash expenditure in the near term.
As announced on 7th June 2014, the Federal Government approval required for the Sherwin Creek Iron Ore Project ("EIS Approval") process remains ongoing and further information has been requested from the Company. Once that information has been provided, the Federal Government will have a further 30 days to grant the EIS Approval or may request further information.
Under the Company's major debt facility, it is able to draw-down on approximately USD10 million in cash currently held in escrow upon obtaining the EIS Approval. Accordingly, the delay in obtaining the EIS Approval and the need to delay further shipments of iron ore given the low iron ore price has impacted the anticipated funding position of the Company.
The Company will receive a prepayment for some ore in advance of the shipment in late June
2014. This will assist the Company to finance the ongoing costs of running the business pending the release of USD10 million under the debt finance facility that is contingent on obtaining the
EIS Approval.
Given that it appears highly unlikely that the Company's major shareholders will support the Rights Issue and Share Purchase Plan (announced on 6 June 2014), the Company is therefore unlikely to raise the full amount being sought absent a material underwriting commitment. The Company is currently seeking such a commitment, but no assurances can be given that such a commitment will be found.
The Company remains absolutely committed to raising the funding required to meet ongoing costs of running the business in the short-term, as well as to finance longer-term expenditures required to develop its major project. To that end, the Company is exploring a number of funding alternatives that would provide some or all of the cash that the Company intended to raise under the Rights Issue and Share Purchase Plan. Pending any such funding alternatives becoming available, the Directors continue to assess the Company's near and medium term cash position.
Rodney Illingworth
Executive Chairman
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