Financing options and newsflow

There doesn't seem to be a lot of discussion about the financing being pursued from last week's update and yet the strategy could prove to be a strong SP mover in the coming months.

Ironbark’s strategy is to minimise the capital costs of the project. The Company is in discussions with parties with regard to contract mining, lease hire and Build Own Operate (BOO) opportunities. Specific key capital items that are potentially open to off balance sheet financing/ownership include the Power Plant, the Mining Fleet, the Processing Plant, the Ship Loader and Marshalling Yard, and the Fuel Farm. These could potentially reduce the capital costs by up to US$150M and would form part of the financing. Some of these plant items may potentially access European Credit Authorities (ECA) funds. Successfully reducing the capital costs in this way would result in a substantially higher Internal Rate of Return for the project.

The collective financing options will be evaluated to form the best possible outcome for shareholders. The financing is likely to include a blend of debt, equity and possibly even partnership or joint venture. All options will have specific pathways and timeframes to reach conclusion and Ironbark is pursuing these as fast as is possible. Milestones and updates will be provided to the market as they are achieved.

I'm delighted with this approach as will make the funding less onerous, will reduce dilution and most importantly, may lead to a series of re-ratings as various funding initiatives are released. In this scenario, expect the first will be a debt injection. This could get the market's attention, given the current market cap of $31m is ridiculous.  

With a project NPV profit of over $US1B, I believe $150m market cap as proposed by djr67 in a post recently, is achievable by the end of the year... with the right newsflow and if zinc prices continue to recover. Pls note my caveats, VivaLaFrance and Average Joe. By the right newsflow, I mean a few substantive financing agreements during the 4th quarter.

Note, $150m market cap would equate to around 26c - the 12 month target share price provided by Patersons in March.

I'm fine being BIG with IBG