Citronen represents one of the largest undeveloped zinc resources in the world with a granted Mining Licence located in a mining supportive and low sovereign risk environment. The Citronen Project is currently moving towards development funding. In addition, the robust Citronen deposit remains open to further mineralisation in many directions. Combined, the deposit's size, expansion potential and advanced stage, Ironbark is considered to be peerless in the listed zinc space on the ASX.
Successful Site Visit with China Nonferrous and Greenland Government
Ironbark is pleased to advise that earlier this month it concluded a highly positive site visit to Citronen with the Greenland Government Minister for Mines, Mute Bourup Egede and the Deputy Minister, Jorgen T. Hammeken-Holm as well as Vice President of China Nonferrous Metal Industry's Foreign Engineering and Construction Co., Ltd ("NFC"), Mr. Qin Junman. NFC has a Memorandum of Understanding with Ironbark for the potential funding and construction of the Citronen Project, and Mr. Junman led a team of engineers and experts from NFC and the Nerin Group in the site visit as part of NFC's ongoing project assessment. In addition Ironbark was supported by a senior engineer from CPC Project Design ("CPC"), a senior Ironbark geologist and a support crew.
The site inspection formed part of the NFC project review and a Feasibility Study update being compiled by NFC for the purpose of preparing the project to access Chinese financing and development with current costs, pursuant to the MoU.
The site inspection was successful in introducing the Greenland Government Mines Minister and Deputy Minister to the Vice President of NFC and his selected team. It provided a solid understanding around the construction requirements and operating conditions for the Project. Presentations and reviews were conducted on the mineralisation, site locations of the open pit and underground mine, the process plant and tailings location, the port location and water supply among many other aspects of the Project.
Background to NFC Agreement
Ironbark is working with NFC under an agreement to:
- Incorporate current Chinese equipment and construction costs into the Citronen Feasibility Study
- Prepare a Project study report in compliance with the financing requirement of China's banks
- Ensure the technical criteria is in compliance with local laws, regulations, standards and codes in Greenland and China
- Assist Ironbark in securing Chinese Project debt financing for the development of Citronen under the terms of the earlier Memorandum of Understanding
Ironbark is working towards advancing the financing and development of Citronen as it progresses to become one of the world's largest zinc mining companies.
Ironbark selected NFC as providing the most technically capable, rapid and competitive construction engineers to deliver a turnkey, fixed price EPC solution to develop and commission Citronen. Moving beyond the existing Memorandum of Understanding with NFC, Ironbark will see the Citronen Feasibility Study updated and tailored to meet the Chinese banking requirements that will target 70% debt financing and provide NFC with an option to acquire up to 19.9% of the Citronen Project. Recently discussions have included exploring options for even higher levels of financing from China.
Ironbark is awaiting the updated Feasibility Study as prepared by CPC which will be released in the near future and also the Feasibility Update being prepared by NFC sometime later. Ironbark will then undertake a marketing program, to better position the Company on the attached peer comparison graph and better reflect the project's value. In conjunction with the prevailing strong zinc price and the updated Feasibility Study, the Company believes it is extremely well positioned to deliver shareholder value.
Ironbark will also update the market on the progress of its Agreement with NFC in relation to the funding and construction of the Project in due course.
"Falling zinc warehouse stock levels are driving a strong zinc price providing Ironbark with exceptional leverage to a rallying zinc price"
The price of zinc has just risen to the highest prices in almost 10 years of over US$2,965 per tonne and at the same time stockpiles are showing a trend of growing metal depletion with level at new multi-year lows on an almost daily basis. This is a very exciting time to be moving s one of the largest zinc projects in the world towards production.
Zinc, the fourth most mined metal by volume, is mostly used for galvanising steel, and has not run as hard this year as it did last year predominately based on mine shutdowns and depletion resulting in a metal deficit. The price of zinc had in fact fallen from its February high but has very recently enjoyed a rapid rebound. One explanation for this rapid recovery is the increase in London Metal Exchange (LME) cancelled warrants (zinc that is marked for delivery). LME zinc stocks are currently below 270,000 tonnes, see Figure 1 (see the link below), which is down by 37 percent and the cancelled warrants are currently almost 70 percent, which suggests market tightness. The Chinese Shanghai stockpiles are following the same trend and are lower by approximately 50 percent. Interestingly lower Chinese treatment charges and better zinc payability terms being offered by the smelters also point to a market tightness. In addition to this, the International Lead and Zinc Study Group (ILZSG) observed that global zinc market deficit widened to 92,400 tonnes in April from a revised deficit of 72,700 tonnes in March. In the first four months of 2017, the zinc market was in a deficit of 112,000 tonnes versus a deficit of 20,000 tonnes in the same period last year.
It has been widely forecast that zinc prices may continue to trend upwards in the near future driven by increasing tightness in the concentrate market, following the recent closure of several major mines and healthy and growing zinc demand. This has been observed already with increasing Chinese refined metal imports. Overall tightness in the market and the major metal warehouses such as the London Metal Exchange (LME) and the Shanghai Exchange with regards to falling stocks are likely to be supportive and drive zinc prices even higher. In the context of Ironbark, this should prove to be a very supportive financing environment.
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About Ironbark Zinc Limited
Ironbark Zinc Limited (ASX:IBG) (OTCMKTS:IRBGY) is listed on the Australian Securities Exchange and is seeking to become a base metal mining house. Ironbark seeks to build shareholder value through exploration and development of its projects and also seeks to actively expand the project base controlled by Ironbark through acquisition. The management and board of Ironbark have extensive technical and corporate experience in the minerals sector. The wholly owned Citronen base metal project currently hosts in excess of 13.1 Billion pounds of zinc (Zn) and lead (Pb). Full details refer to ASX announcement 25 November 2014 - Citronen Project Resource Update - JORC 2012 compliant resource.
Ironbark Zinc Limited