Planned Sales Contracts Completed for First Year Production
Murchison Metals Ltd (“the Company”) advises that interest remains strong for the Company’s Iron Ore product in the North Asian Steel Market and is pleased to announce a further fixed price contract under the Jack Hills Stage 1 Project. This contract adds to the previously announced fixed price sales contracts and completes the planned amount of contracted sales for the first year of production for the Jack Hills Stage 1 Project.
The purchaser, Tangshan Danyang (Group) Co Ltd has agreed to purchase up to 540,000 tonnes per year of iron ore for the first three years and continuing thereafter until increased production becomes available. Tangshan Danyang Co Ltd will purchase up to 2 million tonnes per annum when the Company’s Stage 2 expansion of the Jack Hills project is implemented.
Tangshan Danyang (Group) Co Ltd is a mining and smelting group dealing in the production and sales of iron, steel and coke and is one of the largest importers of iron ore in Tangshan, Hebei Province in China.
The company’s main business is importing iron ore fines, lump and coke from Australia, India, Thailand, Iran, Brazil and other countries to their iron smelter as well as the other steel plants in the Tangshan district.
The company consists of two domestic enterprises, Qian’an Longtai Industry & Trading Ltd (Mineral Company) and Qianxi Xintai Enterprise Ltd (Iron Smelting Company).
On the basis of this iron ore purchase program Tangshan Danyang have further strengthened the development of the Tangshan steel industry. It will provide Tangshan Danyang with a stable high quality raw material and make a firm foundation for the future long-term cooperation between Tangshan Danyang and Murchison.
This contract in conjunction with the previously announced contracts, puts in place total first year sales of almost 1,190,000 tonnes. This represents gross revenue of approximately US$71million in the first year of operation.
Payment will be a 90 day irrevocable Letter of Credit arranged by the buyer and acceptable to Murchison. Both parties accept payment as defined under international standard “UCP 500”.
Robert Vagnoni
Managing Director Murchison Metals Ltd
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