Clive Palmer loans $3 million to battling mining minnow

Billionaire mining baron Clive Palmer will loan battling iron ore junior Australasian Resources $3 million in working capital as the company searches for a strategic investor for its Balmoral South iron ore project.

Palmer already owns 66.37% of Australasian Resources, a stake that is worth around $140.8 million.

While Australasian Resources went into trading halt on 8 April pending a potential capital raising, it has been reported that the provision of a loan was seen as a better option for the company, as it would not dilute existing shareholders.

“The funds from this facility will allow Australasian to continue to progress discussions with the various parties that have shown interest in investing in the Company’s Balmoral South Iron Ore Project,” the company said in a statement.

“These parties include end users eager to secure long term iron ore supply and with access to attractive funding options. Australasian will continue to evaluate the potential strategic investors whilst also using the funds to further increase the value of its projects during this process.”

Australasian Resources’ latest accounts show the company had $2.3 million in the bank at 31 December, and lost $3.68 million in the first half of the financial year.

The directors said in the half yearly accounts that the company was close to engaging an investment bank to help it raise $20 million in capital, although this is yet to take place.

Palmer’s loan is in the form of a 12-month facility bearing interest at the bank bill swap rate plus 2%. It is secured by a fixed and floating charge over the company’s assets and will be repayable if the company does raise capital.