Shree shareholders reject chance at discounted shares
Shree Minerals shareholders have almost unanimously rejected an offer of discounted shares, leaving the company's directors to foot most of the bill.
The company announced a rights issue last month to raise capital for its iron ore project in Tasmania's north-west.
The company put its Nelson Bay River mine into care and maintenance in June because of a declining iron ore price.
It offered existing shareholders a rights issue of more than 20 million shares, but fewer than 600,000 were sold.
Phat Profits analyst David Lennox said the company's directors underwrote the majority of the shortfall.
"They will unfortunately have had to uptake that full 19.6 million share shortfall," he said.
"Shareholders were not very supportive of the issue and that's why they didn't take up their entitlement.
"It was non-renounceable so they couldn't sell it on the ASX, so the only thing they could do was either take it up or let it lapse.
"Obviously the majority of shareholders let it lapse."
He said the future of the mine depended on the resurgence of the iron ore price, which hit a five-year low this week.
"It is a very small operation and the quality of the iron ore is not what you'd call Pilbara-standard quality," he said.
"It's iron ore that would be generally not used in mainstream steel manufacturing and it receives a lesser price because of that.
"We've seen a fall in the iron ore price up to this point down to about $US82.60 per tonne that unfortunately was not sustainable for them in their daily operations."
The rights issue generated $1.6 million in capital but Shree Minerals shares are at an all-time low of six cents.
The company has declined to comment.
