IRON ore play Australasian Resources says its flagship Balmoral South iron ore project has reached a critical milestone after its subsidiary International Minerals issued a feasibility notice to Chinese company Shougang to advance the project to the financing stage.
Australasian Resources' Managing Director, Andrew Caruso
Perth-based Australasian said in a statement that the feasibility notice was issued following a review of the feasibility study results for the Balmoral South project, released to the market on June 18.
Australasian said during the financing stage, International Minerals and Shougang would work towards obtaining a finance offer to fund 100% of the project’s development.
“Under the agreement, Shougang has exclusive rights to deliver a finance offer to [International Minerals] which would provide the necessary funding to implement the project,” the company said.
Shougang is working towards a 50 percent share in the Balmoral project by providing all project funding through an interest-free project loan, guaranteeing the purchase of all the project’s iron ore products and constructing the project or guaranteeing the construction by another constructor.
The Balmoral South project, 80km southwest of Karratha, involves mining and processing magnetite ore from the Susan Palmer deposit to produce 12Mtpa of iron ore products including 7Mtpa of pellets.
The feasibility study predicted a capital cost of $A2.7 billion for the project and shows a real after tax net present value (NPV) of $5.075 billion.
The project is estimated to produce average annual earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.332 billion and average annual net profit after tax (NPAT) of $821 million.
Shares in Australasian remain unchanged at $1.50 in early afternoon trade.
ARH Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
