KEY POINTS:
A company set up as a reverse listing vehicle is looking to buy an iron ore business in Chile for around $120 million.
RLV No3 was previously to be used as the reverse listing vehicle for retail estate firm The Joneses until that project was called off this
year.
After that, the directors of RLV continued to look at other business opportunities in which to use their company.
Yesterday RLV said it had signed a conditional agreement to buy all the shares in Minera Varry, a company incorporated in Chile.
Minera Varry owns a mining concession in Chile for the excavation, processing and export of iron ore. Iron ore production and shipment is expected to start during the third quarter of 2009, RLV said.
The purchase price for the Minera Varry shares included US$13.5 million ($21.87 million) cash, to be paid in several tranches, subject to certain conditions.
Shares worth $99.6 million in RLV would also be issued to the vendors of Minera Varry.
RLV said it had entered a conditional subscription agreement with an offshore investor to raise up to US$25 million through the issue of 200 million new ordinary shares in RLV at US12.5c each.
A deposit of US$2.5 million had been received from the investor.
RLV director Roger Gower said RLV was not looking to raise money from the New Zealand public.
"We're pretty excited about it, really, in the gloom, to be able to do something like this," he said.
The mining interests looked to have great potential, and Minera Varry had negotiated arrangements with strategic ports near the mining concession which would enable iron ore to be exported.
"Often in the iron ore business, there's a constraint somewhere ... As it happened, the Minera Varry people, along with our people, have done a pretty good job of getting all the various elements lined up," Gower said.
The deal was conditional on RLV being satisfied with its due diligence investigations by November 17.
The shareholders of RLV had to approve the transaction, including for NZX and Takeovers Code purposes, by December 15.
RLV would also seek shareholder approval for the private placement of 200 million shares at an issue price of US12.5c to fund the purchase of Minera Varry shares and help with Minera Varry's working capital requirements.
It was proposed that RLV would be listed as Orion Minerals Group.
RLV shares last traded in July at 1c, down from the high for the past year of 5c.
- NZPA