NSL Consolidated has entered into a conventional secured funding loan agreement totalling Aus$5 million to allow construction, commissioning and operation of the phase two wet beneficiation plant at its Kurnool iron ore processing stockyard in Andhra Pradesh state. Phase two will be a wet beneficiation process, allowing NSL to produce a high grade, premium price iron ore product grading between 58-62% iron at an annual rate of around 200,000 tonnes.
The agreement, signed with NSL’s current funding partner and investor, New York-based investment firm Magna, means that phase two is fully funded through construction and commissioning. It also enables NSL to immediately recommence operations at the phase one dry beneficiation plant.
NSL is the only Australian or foreign company to own and operate in India’s iron ore market. It has a dry processing plant operation at Kurnool serviced by two of its nearby iron ore mines Kuja and Mangal.
The dry plant will immediately recommence with working capital drawn from the new loan facility, while project work for phase two construction will also immediately commence with a view to being fully commissioned within 12 months.
This year, NSL has successfully negotiated offtake agreements for phase two’s high grade iron ore product with US$9 billion global conglomerate and Indian private sector steel producer JSW Steel, and pellet, power and steel producer BMM Ispat, an existing customer for NSL’s phase one product.
Magna has previously provided loan support for NSL’s Indian iron ore growth strategy. The new arrangements replace the previous US$4 million converting loan facility entered into between NSL and Magna in January this year, of which US$750,000 had been drawn down. At June 30 this year, Magna had already elected to convert a total of US$225,000 of that drawn loan balance, to shares in NSL.
NSL’s managing director Cedric Goode says, This further support by Magna for our Indian strategy is a true testament to the partnering nature of our relationship with this key New York investor. Both parties have worked closely in recent months to understand the more substantial potential that phase two brings to Kurnool and then to bed down financing arrangements allowing construction, commissioning and production and sales activity to recommence.”
Magna founder and CEO Joshua Sason says, “Magna is particularly pleased to continue working with NSL as we share a view of the long-term potential of this key market within a global iron sector undergoing some flux.”