FORTIS Mining has finalised a strategy to become the next "global force in potash", with plans to raise $236 million from investors in China and Hong Kong, The Wall Street Journal reported.
Fortis, which is seeking approval to change the nature of its activities for the venture, today said it would raise the funds via shares and convertible notes - to buy and develop two potash mines in Kazakhstan - to finalise the three-month process.
If approved at a shareholder meeting in late June, Fortis would separately issue 40 million shares and 160 million convertible notes to Hong Kong-based institution Topsun Holdings and Chinese institution Yubang Industry Development.
Proceeds would be used to fund the acquisition of the Chelkar and Zhilyanskoe potash mines in Kazakhstan, tenement exploration in Australia and working capital.
By mid-afternoon, share in Fortis were 4.08 per cent higher at $2.04.
"Fortis today officially becomes a global force in the potash industry," said Fortis chairman Jitto Arulampalam.
Melbourne-based Fortis listed in December, after a $4m initial public offering at 20c, as a gold and base metals explorer.
The stock began its run higher in February after Hong Kong investment company Grand Concord Investments and its owner, Madam Cheung took a stake, and it announced it was undertaking due diligence on a "world class potash" asset.
In late March, Fortis struck a complex agreement to acquire a controlling interest in the potash assets for $US260m, via a bid for Ji'an Resources, which ultimately owns the Kazakhstan mines.
Fortis said today shareholders would also be asked to approve the issue of 40 million shares to Ji'an.
To fund the remainder, the company plans to issue shares to Topsun and Yubang at $1.60, to raise $64m before costs, which would be held in escrow for 12 months from the issue date.
Upon approval to the change of its activities, Fortis would issue the pair a further 160 million convertible notes to raise $160m, with each note holding a three-year term, a face value of $1 and accruing interest of 3 per cent per annum.
The majority of the notes convert after 12 months at a ratio of one share for each two notes, but a portion have a longer escrow and convert at a ratio of one for three.
Fortis also plans to issue 12 million convertible notes to private Hong Kong-based investors to raise $12m, with each note holding a face value of $1 and expiring on April 15, 2012.
Fortis is working with global potash experts, Ercosplan, to produce a JORC compliant report on the mines.
...