Crusader rolls out Brazil pay dirt

While some companies used the Easter break to roll out their bad news, Crusader Resources sent shareholders off on holiday with a nice little sugar hit.

After a long wait, the Brazil-focused company confirmed it was now selling iron ore, having graduated from developer to producer.

While gold remains the main game for Crusader, managing director Rob Smakman said sales from the Posse iron ore mine would help sustain the company while feasibility work continues on the flagship Borborema goldmine in north-east Brazil.

"We are confident the Posse cash flow will do more than keep the lights on and actually see the cash at bank increasing soon," Mr Smakman said.

By June 30, Posse is expected to have returned a profit of about $2 million, and when combined with a new $20 million debt facility approved by Macquarie last week, Crusader is now unlikely to need further financing until it comes time to build Borborema. Some reports suggest the company could need to raise $250 million to build Borborema, but a bankable feasibility study will soon reveal all.

Investors appeared to like Crusader's news, lifting the share price by more than 16 per cent to 35¢ on the last trading day before Easter.

The stock is up almost 35 per cent in the past fortnight, but it is far from the $1.50 of July 2011, despite the gold price being virtually the same. Expectations of a capital raising to build Borborema appear to be the main weight on the stock.

Mr Smakman said regular cash flows from Posse should give the company a point of difference from most other exploration and development companies.