Macarthur Signs Iron Ore Offtake with Glencore for Lake Giles

Macarthur Minerals (TSXV:MMS,OTCQB:MMSDF) has signed a life-of-mine offtake deal with Glencore (LSE:GLEN,OTC Pink:GLCNF) for iron ore from its Lake Giles project in Western Australia.

Valued at approximately US$4 billion, the binding agreement is set to see Macarthur supply approximately 4 million tonnes per year to Glencore for the first 10 years of production. It also comes with the option to extend the agreement by an additional 10 years, which would entail Glencore receiving all of Lake Giles’ future iron ore production.

However, Glencore also agreed to release up to 70 percent of its offtake from Lake Giles in the event that Macarthur locks down project financing from another potential offtake partner.

“Seeing a commitment of this size validates our resource and project and puts Macarthur in a position to maximize value to our shareholders. Macarthur’s management is pursuing debt financing discussions with European banks and international financial institutions,” Macarthur Executive Chairman Cameron McCall said in a statement.

“Achieving this key milestone is the beginning for Macarthur to transition into a large-scale global resource production company. A project of this size will provide long-term Western Australian job creation for a generation, especially in the local region of the proposed iron ore mines and for the port workforce in Esperance.”

Located in Western Australia’s Yilgarn region, Lake Giles is situated close to usable infrastructure, including “considerable spare port and rail capacity” such as the Port of Esperance, which has an iron ore export capacity of 11.5 million tonnes.

Over the last several weeks, the company has been seeking out private placements and financing to help get a bankable feasibility study off the ground for its Moonshine magnetite and Ularring hematite iron ore deposits.

Moonshine, a prospect at Lake Giles, has an inferred mineral resource of approximately 1.3 billion tonnes at 30.1 percent iron. According to Macarthur, metallurgical test work on Moonshine has indicated that it can achieve an export product of over 65 percent iron, which currently holds a market value of US$98 per tonne.

As of 6:15 a.m. EST on Thursday (March 21), iron ore was trading at US$85.65 per tonne.

Glencore’s share price closed 1 percent lower on the LSE on Thursday, hitting GBX 316.95 by the end of trading. Meanwhile, Macarthur’s share price remained unchanged at C$0.05 on the TSXV, as the company halted trading on Thursday morning.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.