Resurgere buys Maharashtra iron ore mine for Rs 800 mln

MUMBAI (makemystocks): Resurgere Mines and Minerals India Ltd (BOM: 533017) has acquired an iron ore mine at Satarda in Sindhudurg district of Maharashtra for Rs 800 million.

Chairman and Managing Director Subhash Sharma was quoted saying that the company has acquired the rights for the full tenure of the (iron ore) mine.

The privately-owned mine has estimated reserve of 49 million tonne and no royalty will be paid on it, he said.

Resurgere is also setting up a 1.2 million tonne beneficiation and pelletisation facility close to the mine at a cost of Rs 3.88 billion, Sharma said.

This facility will be commissioned in 24-30 months.

About Rs 2.5 billion of the funding for the facility will be from proceeds of the company's global depositary receipts issue earlier. Resurgere will also raise Rs 1 billion debt for funding the unit.

The remaining investment into the facility will be through internal accruals, Sharma said. Resurgere is also negotiating for four more iron ore mine leases in Sindhudurg district.

These mines have estimated reserve of 100 million tonne and are spread over 400 hectare, he said.

Resurgere has no immediate plans to raised funds via the equity route but may raise some debt, Sharma said.

In Aug 2008, the company raised Rs 1.2 billion via an initial public offer at Rs 270 a share.

Later in February, Resurgere raised Rs 810 million via issue of warrants convertible into shares of Rs 125 each.

In June, the company raised Rs 2.5 billion by issuing global depositary receipts. The effective price for the GDR was Rs 80 a share, Sharma said.

Resurgere expects sales volume of 4.05 million tonne and turnover of Rs 6.5 billion in 2010-11 (Apr-Mar), he said.

In 2009-10, the company's sales volume was 3.16 million tonne and turnover Rs 4.38 billion.

The shares of the company were down by 1.59 per cent from the previous close, on the Bombay Stock Exchange (BSE).