Why the Magnum (ASX:MGU) share price is soaring 12% today

The Magnum Mining and Exploration Ltd (ASX: MGU) share price is up 12% today following two positive announcements from the company.

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The Magnum Mining and Exploration Ltd. (ASX: MGU) share price is one of the better performers on the ASX today. This comes after the company announced a successful placement and released its corporate presentation.

During early afternoon trade, the mineral miner’s shares are swapping hands for 17.5 cents, up 12.9%.

Details of the placement

Investors are buying Magnum shares in droves following the company’s two positive releases.

In its first announcement, Magnum advised it has raised $6 million through a private placement. The offer received strong interest from institutional and sophisticated investors, in which the company was forced to scale back applications.

Subject to shareholder approval, the placement will issue 40 million new ordinary shares at a price of 15 cents apiece.

Magnum directors, Matt Latimore and Don Carroll also took part in the capital raise, both investing up to $250,000 each.

Mr Dano Chan, Magnum managing director commented on the placement, saying:

I am very happy with the results Magnum has achieved in this private placement. It is a very successful one that means we can accelerate our activities to become a cash flow generating mine quickly with Direct Shipping Ore whilst working on our growth opportunities through production of HBI and Pig Iron for the US market.

The company stated it is working with New York-based advisors, RK Equity Advisors LLC and Pickwick Capital Partners LLC. It hopes to undertake a cross-listing on the NASDAQ International sometime in the second-half of 2021. This will allow investors in the United States to easily transact with the company.

The sole lead manager of the placement, Shape Capital Pty Ltd, will receive a 6% capital raising fee of all funds. In addition, 2 tranches will also be allocated to Shape that includes the following:

  • 6 million unlisted options with a 3-year expiry at a strike price of 20 cents;
  • 9 million unlisted options with a 3-year expiry at a strike price of 20 cents, subject to shareholder approval.

What did Magnum highlight in its presentation?

In further news boosting Magnum shares, the company underscored its strategy in becoming a leading iron ore exporter and green steel producer.

It explained that its well-positioned to capture domestic United States market demand. Furthermore, Magnum will seek to export iron ore and hot briquetted iron (HBI) to Asia Pacific markets during Q4 FY21.

In the year ahead, the company is looking at capitalising on the long-term opportunity for green steel. Its Green Hydrogen plant is scheduled to be built, with the production of HBI and pig iron slated for Q2 FY22. A recent agreement with M Resources was also executed to market Magnum’s iron ore and green steel products.

About the Magnum share price

Over the last 12 months, the Magnum share price has gained over 330%, with year-to-date performance sitting above 230%. The company’s shares reached an all-time high of 21 cents late last month.

Based on the current share price, Magnum has a market capitalisation of roughly $74 million.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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