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India Globalization Capital, Inc (NYSE:IGC,AMEX:IGC) announced that it has signed a MOU with Kommu Venkateshwara Metal Miners with plans to set up a mine and export facility.
India Globalization Capital, Inc (NYSE:IGC,AMEX:IGC) announced that it has signed a MOU with Kommu Venkateshwara Metal Miners with plans to set up a mine and export facility.
The press release is quoted as saying:
KVM has approximately 500 acres of land with rich iron ore deposits. IGC and KVM will form a joint venture that will be 60% owned by IGC and will focus on mining iron ore. The iron deposits on the property are estimated to be over 100 million metric tons (MT). According to geology reports and tests, the grade of iron ore on the property is relatively high with 61% to 65% Fe content. The joint venture will have exclusive rights to mine the land in perpetuity. The initial focus of the joint venture will be to establish mining facilities to extract 300,000 to 400,000 MT of ore fines in the first year of production, reaching 1 million MT in the third year. IGC’s initial investment will be about $3 Million in cash and IGC will repurpose equipment from its construction business to facilitate operations. Additional capital will be contributed as the production capacity is expanded. The net margins to IGC in the initial phase are expected to be between 20 and 25%. Platts, a global provider of energy and metals information, recently posted CFR prices to North China for 62% iron ore at about $170 /DryMT.
Ram Makunda, CEO of the Company says:
“IGC, through its subsidiaries in India, has customers in China, operations at ports and experience with mining, transportation and shipping ore from India to China. We have consistently articulated a plan to vertically integrate our iron ore business to maximize our margins. This joint venture represents a significant step to realize this plan at a modest capital cost.”
To access the full release, click here.