Ironbark Zinc Limited (ASX:IBG) has signed a memorandum of understanding (MOU) with Metso Oyj (HEL:METSO) (FRA:VLM) (OTCMKTS:MXCYY) to reach a commercial services-and-equipment agreement.
The Australian company’s memo with Metso Sweden AB provides the parties with a negotiating platform for a commercial agreement for Ironbark’s flagship Citronen Zinc-Lead Project in Greenland.
The MOU also allows Helsinki and Frankfurt-listed Metso to start on engineering tasks before processing equipment specifications are fully complete.
Ironbark reported today: “The completion of the design works, and manufacture of the key process equipment is contingent upon the parties entering into a commercially binding agreement to design, manufacture and supply the Citronen processing plant.”
Ironbark managing director Jonathan Downes said: “We are delighted to have moved towards building on our long-running relationship with Metso and the Citronen zinc project.
“Metso is exceptionally well regarded internationally and has direct experience with projects with very similar commodities, grades and scales to Citronen.
“Metso is also located in Scandinavia and therefore is well positioned to comply and assist with the training and employment obligations that Ironbark is operating under in Greenland.”
The commercial agreement will take in:
the scope of Metso’s supply of services and equipment;
the price for Metso’s supply of services and equipment and payment terms, including a lump sum cost for remaining engineering works and project management scope;
process guarantee provision;
Metso compliance with Greenlandic Government requirements and guidelines.
Feasibility study specifics
Ironbark’s September 2017 feasibility study for Citronen targeted a 14-year mine life where 180,000 tonnes zinc and 25,000 tonnes of lead would be produced each year for the first five years.
The study sharpened up project economics to put its net present value (NPV) at US$1.034 billion (US$909 million post-tax) and its internal rate of return (IRR) at 36% (35% post-tax).
The study’s US$514 million capital cost estimated averages out to US66 cents for each pound of zinc produced from Ironbark’s mining inventory.
Ironbark’s inventory consists of 45 million tonnes grading 5.3% zinc and 0.5% lead is found in a 70 million tonne mining resource grading 5.1% zinc and 0.5 lead.
The treasured semiconductor germanium has been found at the site but knowledge of the element’s presence is still emerging and was not included in the resource.
The JORC 2012-compliant resource for Citronen's zinc and lead assets
Ironbark has previously expressed its hope of attracting equipment suppliers to reduce the US$514 million capital cost of building its big zinc mine by 30% or US$150 million.
Subiaco company Ironbark inked a mining services MOU with Byrnecut Offshore Pty Ltd, early on in August 2018, which Downes had said provided Ironbark with “bolt-on” underground expertise for the shallow underground mine.
READ: Ironbark Zinc crosses a major milestone by proving shipping access to its project in Greenland
The company has been courting suppliers — and bankers and financiers with the help of UK-based major project finance facilitators from Cutfield Freeman & Co Ltd — this field season in Greenland and Europe.
Today the Western Australian company reported talks with potential suppliers were progressing.
The company said: “Ironbark is also in discussions with other highly-regarded groups regarding the supply of all components of the Citronen facility.
“These companies have the potential to significantly assist with the overall project financing.”
World-leading industrial company Metso has worked with Ironbark for several years, making a significant contribution to the company’s feasibility study with its work on a process flow sheet for Citronen.