Ironbark Zinc (ASX: IBG) has secured a letter of interest (LOI) with the Export Import Bank of the United States (EXIM), which is considering financing up to US$216.1 million (A$308.6 million) of the company’s Citronen zinc-lead project in Greenland.
The US is dependent on imports for 82% of its annual zinc consumption, according to the US Geological Survey. For lead, the country imports 30% of its requirements.
EXIM is the official export credit agency of the US.
All up, the estimated construction cost for Citronen is US$514 million (A$734.04 million).
Ironbark says that while the LIO is non-binding and does not represent an official commitment from EXIM, the company views it as an important step in advancing project financing for Citronen’s development.
The proposed key commercial terms are that EXIM would be able to finance up to US$216.12 million of the US content for the project with a loan term of 8.5 years.
Talks with US agency over six months
Ironbark says the execution of this LOI represents the culmination of initial discussions with EXIM where the US officials were briefed on the project and Ironbark’s proposed development plans.
Ironbark managing director Michael Jardine said the company has been engaging with EXIM over the past six months with the intent of the parties to better understand each other’s strategic goals and steadily building the foundations for a long-term relationship.
“The execution of this LOI is another significant, and potentially transformational, milestone in the Ironbark journey towards Citronen’s development and the long-promised move from developer to producer,” he added.
“The company could not ask for a better potential counterparty than EXIM.”
Mr Jardine said EXIM’s mission is to support American jobs by facilitating the export of US goods and services.
The US agency has extensive experience in backing mining developments.
Looking for support from other lenders
He said the company will also be pursuing similar arrangements with other export credit agencies and commercial lenders.
The feasibility study will be finished in early 2021 and, following that, Ironbark will seek to convert these agreements into binding financing deals.
Citronen has a resource of 78 million tonnes at 5.1% zinc and 0.5% lead.
The feasibility study will be based on mining 3.3Mt per year to produce 200,000tpa of zinc, with a mine life of 14 years (and which can be extended when further inferred resources are converted to reserves).
The deposit has a contained 5.7Mt of contained zinc and lead.