LONDON (ShareCast) - (Sharecast News) - Ironveld and its prospective strategic partner Inclusive Investment Group (IIG) announced on Thursday that they have made an application to an unnamed "major South African funding institution" for project development funding which, if successful, would provide it with sufficient funds to start mining and production at its magnetite project in South Africa.

The AIM-traded firm had said on 30 March that it had entered into arrangements with IIG to raise potential gross proceeds of around $3.2m (£2.53m).

In particular, the two companies entered into an option agreement, under which IIG could subscribe for 440,176,070 new shares in Ironveld at a price of 0.42p each.

The option was to expire on 17 June.

In order to bring the timetable for the potential option exercise in line with the proposed project financing, Ironveld said it had agreed to an extension to the exercise period to 30 September.

In consideration, IIG agreed to provide the company with a bridge funding facility of up to ZAR 3.7m (£0.17m), which was intended to provide it with funds to continue its operations until the funding application is reviewed.

Looking at the IIG-led project development funding application, Ironveld said it was for up to ZAR 240m.

IIG also agreed to extend a loan of $1m to Ironveld on completion of the subscription.

Should IIG choose to convert the loan and all accrued interest at the end of the loan term, it would be issued with a further 233,373,349 shares, taking its holding of Ironveld to 46.8%.

Ironveld had agreed, conditional on shareholder approval, that any bridge loan funds drawn down plus accrued interest, together with IIG's initial $0.25m option fee, would convert into Ironveld shares at the subscription price of 0.42p should the option expire.

All other aspects of the fundraising, comprising potential gross proceeds of $3.2m, remained unchanged, the Ironveld board said.

"In recent weeks we have been working very productively with IIG and the potential for a larger project financing for Ironveld is becoming much more realistic," said chief executive officer Martin Eales.

"If successful, the financing will allow the company to progress various work streams and transition to mining and production at our magnetite project, marking a transformative milestone for Ironveld."

"We are pleased that IIG has demonstrated its continued commitment to the transaction by agreeing to the bridge loan facility announced today."

At 1206 BST, shares in Ironveld were up 5.56% at 0.95p.

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