Can Magnetite Mines’ $2.65M Rights Issue Unlock Razorback’s Potential?

Capital Raise to Advance Razorback Iron Ore Project

Magnetite Mines Limited (ASX – MGT) has launched a pro rata renounceable rights issue to raise up to approximately $2.65 million. The offer invites eligible shareholders to subscribe for one new share for every three shares held at an issue price of $0.065, accompanied by one free attaching option per new share. The rights issue is partially underwritten to $500,000 by Mahe Capital, providing a degree of funding certainty.

This capital raising is a strategic move to fund critical next steps in the development of the Company’s flagship Razorback iron ore project in South Australia. The funds will be directed towards completing a Definitive Feasibility Study (DFS), supporting the assessment of the Mining Lease Proposal (MLP), advancing water supply de-risking studies, and exploring the potential for gold and critical minerals within the Company’s extensive South Australian tenement portfolio.

Strategic Partnerships and Project Milestones

Magnetite Mines has made significant progress over the past year, including signing a non-binding Heads of Agreement with JFE Shoji Australia Pty Ltd, a subsidiary of Japan’s second-largest steelmaker, JFE Steel. This agreement lays the groundwork for potential funding towards the DFS in exchange for offtake rights and joint venture opportunities. The Company is also in discussions with other potential strategic partners, with JFE expressing interest in co-investment arrangements.

In March 2025, the Company submitted its Mining Lease Proposal to the South Australian Department for Energy and Mining, a key regulatory milestone currently under assessment. Concurrently, land access negotiations are advancing, with binding agreements secured for critical infrastructure.

Innovative Water Processing and Green Iron Initiatives

Water supply is a pivotal factor for the Razorback Project. The base case involves a coastal desalination plant supplying fresh water via pipeline. However, Magnetite Mines has pioneered a proprietary saline water processing method, with provisional patent lodged in April 2025. This innovation could reduce both capital and operating costs while lowering environmental impact, although further optimization is underway.

Additionally, Magnetite Mines is part of the Green Iron SA consortium, alongside Aurizon Holdings, Flinders Port Holdings, and GHD, aiming to establish a green iron production hub in Port Pirie. This initiative aligns with South Australian Government priorities to foster a sustainable green iron industry.

Offer Details and Shareholder Participation

The rights issue price represents a 25% discount to the last closing share price before the announcement, providing an attractive entry point for shareholders. Eligible shareholders in Australia and New Zealand can participate from 15 August 2025 until 29 August 2025, with the option to trade their rights on ASX during the rights trading period.

The offer also includes a shortfall facility allowing shareholders to apply for additional shares not taken up by others, and options to be issued to the lead manager subject to shareholder approval. If fully subscribed, the capital raise will increase the company’s shares on issue and provide additional working capital to support ongoing operations and project development.

Risks and Outlook

Magnetite Mines highlights several risks inherent in its operations, including the need for additional funding, uncertainties around securing binding strategic partner agreements, operational and regulatory challenges, and commodity price volatility. The proprietary saline water processing technology remains in the provisional patent stage and requires further validation. Regulatory approvals for mining leases and environmental permits are pending and critical to project advancement.

Despite these challenges, the Company’s progress and strategic initiatives position it to capitalize on growing demand for premium magnetite concentrates, particularly in the context of decarbonizing steel production globally.