Japanese trading house Mitsui & Co. will contribute a total of AU$86 million to help Carpentaria Resources move the project forward.
Through the agreement, Mitsui will put AU$5.4 million towards a bankable feasibility study (BFS) for Hawsons and will contribute AU$81 million to debt funding for the eventual construction of the mine.
In return, Mitsui will have the option to receive over 2 million tonnes per year of “supergrade” pellet feed from the project for a 20-year period, with exclusive rights to sell the product in Japan.
The AU$5.4 million will account for 20 percent of the estimated funding requirements for the BFS, which is anticipated to cost AU$27 million. The BFS is expected to be completed in the next 12 to 15 months.
Carpentaria’s managing director, Quentin Hill, spoke highly of the financing agreement, explaining that it will help minimize risk for the project and allow for better insight on development.
“The financing reduces the project’s financing risk and enhances its bankability, combining binding investment grade off-take with funding support,” he said in a statement.
Hill added, “[t]his 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.”
Hawsons is a joint venture between Carpentaria, which owns 68.7 percent, and Pure Metals, which owns 31.3 percent. Located 60 kilometers southwest of Broken Hill, the asset is considered to be ideally located based on the presence of existing power as well as port, rail and road infrastructure.
The goal for the project is a production rate of 10 million tonnes per year. The company will be targeting the premium high-grade product market between pellets and pellet feed.
Carpentaria’s share price was up 2.25 percent at close of day Wednesday (August 8), sitting at AU$0.091. The company’s share price has fallen 17.27 percent year-to-date, but is up 30.92 percent in the last year.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.