Genmin (ASX: GEN) has received a letter of intent that will see Sino-Hunan International Engineering and Development (SHICO) become a major participant and offtake partner in the development of the company’s Baniaka iron ore project.
SHICO will look to bring in approximately 60% of the project funding requirement to complete a proposed five-million-tonne-per-annum Stage 1 development.
It will also work with Genmin on a 10-year strategic collaboration plan to support the development and potential subsequent expansion of Baniaka.
Extensive Local Experience
Baniaka is located in the central African nation of Gabon, where the Chinese state-owned conglomerate has a decade of operating experience, including construction of the nearby Grand Poubara hydroelectric power facility.
As part of the agreement, which is designed to explore a mix of funding structure options including potential project equity investment, Genmin has granted SHICO an option to enter into a five-year iron ore purchase contract.
The collaboration will include Central South University, leveraging its technical expertise and existing involvement in Baniaka studies, with the parties intending to immediately move toward signing a binding Memorandum of Understanding (MoU).
“This proposed long term partnership combines access to capital, Chinese engineering expertise, and potential long-term offtake placement — all critical elements to unlocking Baniaka’s full potential and inherent value.” Genmin chief executive officer Andrew Taplin said.
“We look forward to advancing negotiations towards a binding agreement that will underpin the next phase of Baniaka’s development.”
PowerChina Review
Genmin had previously signed a binding MoU with PowerChina subsidiary Sinohydro in April for the provision of an engineering, procurement, and construction proposal, along with assistance in sourcing funding from financial institutions, investors, and iron ore end-users.
The company then received a positive review from PowerChina in late September with regard to providing major infrastructure engineering and construction proposals for Baniaka.
The proposals covered key non-process infrastructure including a 60-kilometre private haul road, a 30km overhead power transmission line, and an onsite workforce accommodation village.
Genmin will use proceeds from its $25.7 million two-tranche placement in November to help advance Baniaka to a final investment decision, execute project financing, and commence the project’s construction.
