Strandline Resources secures US$60m bond issue for Coburn mineral sands project
Strandline Resources has now locked-in binding offtake agreements for more than 90% of its expected production from Coburn, with the remaining zircon to be sold on the spot market.
Mineral sands developer Strandline Resources (ASX: STA) has completed its debt funding for the Coburn mineral sands project in Western Australia with a senior secured US$60 million (A$77.6 million) bond issue.
Coburn, 240km north of Geraldton, has an initial 22.5 years of ore reserves containing zircon, ilmenite and rutile and is capable of supplying 5% of the world’s zircon needs.
The bond will stand equal against the approved loan facility from the Northern Australia Infrastructure Facility from which Strandline can draw up to $150 million.
All-up, Coburn has an estimated $260 million capital cost.
The company said the bond, which has a five-year tenor, was “heavily supported” by global institutional credit investors which, Strandline added, reflects “the robust financial outlook for Coburn”.
All key approvals in place for Coburn
The project has all key development approvals and offtake agreements in place.
These include port access at Geraldton while contracts have been let for the building of a power station and gas supply for that plant.
The Coburn power station, to be located near the mineral separation plant, will be powered by liquefied natural gas and complemented by solar energy.
Managing director Luke Graham said completion of the bond was another pivotal milestone.
“This highly successful debt raising is another strong endorsement of Coburn’s outstanding financial returns and technical merit,” he added.
“In parallel with the funding process, Strandline continues to advance front-end engineering design, award of construction projects, long lead procurement and site early works.”
Production weighted to premium zircon and titanium
Coburn is regarded as construction-ready with a definitive feasibility study (DFS) confirming robust economics and its future as a large, long-life strategic asset, the company said in a recent presentation.
Strandline’s production mix is weighted to premium zircon and high-grade titanium feedstock products that are used in ceramic tiles (50% of the market), refractory applications, paint, titanium metal and welding rock applications.
At present, China dominates the 1.1 billion tonne per annum zircon market with a 47% share, while Iluka Resources (ASX: ILU) is the most influential company in setting benchmark prices.
The Coburn project was acquired about 20 years by the company, which was then listed as Gunson Resources.
Strandline also has two mineral sands projects in Tanzania.
The most advanced is Fungoni, 25km from the capital Dar es Salaam, while its other project, Tajiri, has a mineral sands target along 30km of coastline.