Lonmin buys into Wallbridge (June 07, 2007)

Lonmin (LMI-L) has agreed to take a private placement that could give it an 18% shareholding in Wallbridge Mining (WM-T), and cements an existing alliance in the Sudbury mining camp.

Lonmin would get 10.8 million units consisting of a Wallbridge share and half a warrant, with a full warrant exercisable at $1 for three years. Exercising all the warrants would give Lonmin 18.2% of Wallbridge’s outstanding shares. Lonmin pays 60 per unit, putting $6.5 million into Wallbridge’s treasury. The unit price is at about a 25% premium to Wallbridge’s recent share price.

Under the agreement, Wallbridge must spend 60% of the proceeds of the issue on properties in the North Range of the Sudbury area. After the initial expenditure Lonmin will have an option to enter a joint venture on the 354-sq.-km North Range properties, which cover footwall rocks outside the main Sudbury intrusive structure. Lonmin also gets a right of first refusal, in force for five years, on Wallbridge’s Sudbury-area properties, though this is subordinate to Wallbridge’s existing agreements with other companies.