South Australia’s Renascor Resources (ASX: RNU) has been granted in-principle project finance support from the Netherlands government for the development of its Siviour graphite project, along the state’s Eyre Peninsula.
The company today announced it had received a letter of interest from government agency Atradius Dutch State Business confirming its support under the Dutch export credit guarantee scheme (ECA cover).
Atradius is responsible for administering the export credit agency scheme, offering insurance and guarantee products for projects involving the export of capital goods from the Netherlands.
Siviour qualified for the scheme based on the sourcing of Dutch content through Renascor’s international engineering, procurement and construction partner Royal IHC, which is based in the Netherlands.
In November, the companies signed a landmark strategic partnership agreement whereby Royal IHC will deliver the project’s definitive feasibility study with the support of Brisbane-based engineering firm Wave International.
It will also commit an additional $1 million to undertake early project works at Siviour, including metallurgical testing and detailed engineering and design.
Renascor has estimated that up to approximately 60% of the project’s capital expenditure costs are expected to qualify for ECA cover.
Renascor managing director David Christensen said the in-principle support represents the first milestone in the company’s engagement with Atradius.
“It is an important part of [our] progress to secure project financing for Siviour and reinforces our aim to become a globally-significant graphite producer,” he said.
“It is also a potential game-changer, giving [us] much greater access to debt markets and enabling us to accelerate our financing plan.”
He said the letter of interest does not constitute a commitment to provide ECA cover and there is no certainty that an agreement will be reached between the parties.
The next step would involve further due diligence investigations by Atradius.
Mineral lease approval
Siviour is one of the world’s largest high-grade flake graphite deposits, boasting an ore reserve of 45.2 million tonnes grading 7.9% total graphitic carbon for 3.6Mt of contained graphite.
Earlier this week, Renascor was granted a mineral lease for the project, following a three-year review of the potential environmental, social, economic and technical impacts and benefits.
It was the first step of the South Australian Government’s two-stage mining project assessment and approval process.
“It demonstrates that the government is satisfied that [Siviour’s] proposed level of impact is acceptable,” Mr Christensen said.
The second step requires Renascor to submit a Program for Environment Protection and Rehabilitation outlining how the conditions of the mineral lease will be met.
The PEPR must be approved before mining operations at Siviour can commence.
Renascor expects to make its submission to the government later this year.
First production from Siviour is targeted for early 2020.
At mid-afternoon, shares in Renascor were trading 10.53% higher at $0.021.