Blue-chip Japanese trading house Mitsui & Co., Ltd has secured off-take from Carpentaria’s Hawsons Iron Project in two-stage financing package.
|The Hawsons Iron Project is located 60km south-west of Broken Hill, NSW|
In a major advance, emerging iron producer Carpentaria Resources announced an agreement with Mitsui to drive development of its flagship Hawsons Iron Project.
Under the agreement, the blue-chip Japanese trading house will contribute AU$5.4 million towards the cost of the project’s bankable feasibility study (BFS) for an option over 2 Mtpa of Hawsons Supergrade® product off-take.
Significantly, the BFS funding is non-dilutive to shareholders and is equivalent to 20 per cent of the estimated BFS funding requirements.
This off-take will be secured by Mitsui subject to Mitsui’s option exercise with a US$60 million (at current exchange rates, AU$81 million) contribution to the debt funding package for the construction of a new magnetite mine just 60km south-west of “the Silver City.”
CAP’s Managing Director, Quentin Hill, said Mitsui’s financing provided a major vote of confidence in Hawsons as the world’s leading high-quality iron ore concentrate/pellet feed project.
“We are delighted to welcome Mitsui to the project, given its status as one of the largest international investors in Australia’s resources industry, including major iron ore developments. This investment confirms Hawsons’ position as the world’s leading undeveloped high-quality iron ore project and supports our view that the Hawsons can satisfy the demand from customers in the high quality, high-value and high-growth iron ore markets of direct reduction iron (DRI) and pellet feed,” Mr Hill said.
“Importantly, the financing reduces the project’s financing risk and enhances its bankability, combining binding investment grade off-take with funding support. This model is highly beneficial to CAP shareholders, as it avoids dilution, addresses key project delivery risks and adds significant value to the project. We have a clear plan for development that is on track and we will continue to pursue non-dilutive arrangements where possible.
“We now expect our current discussions with blue-chip off-takers and fund managers to accelerate ahead of securing the remaining BFS funding and develop Hawsons into a major new mine.”
The Hawsons BFS is targeted to be completed within the next 12-15 months.
CAP has previously secured 120 per cent demand for Hawsons’ initial planned production of 10 Mtpa from steelmakers and trading houses across Asia and the Middle East.
“Mitsui is the first-mover with a funding commitment, and the additional competition for the product is expected to drive development, raising the stakes for those seeking to secure Hawsons off-take,” said Mr Hill.