Anglo American has been granted the right to invest up to $US15 million ($21.95 million) and receive 100 per cent of offtake from Alien Metals’ Hancock iron ore project in Western Australia.
The major miner has signed a mandate letter with Alien Metals’ subsidiary Iron Ore Company of Australia (IOCA), comprising a $US10 million ($14.6 million) advance payment facility and 100 per cent offtake for sinter fines and lump from Hancock.
The offtake terms include vessel pre-payments for up to $US5 million ($7.3 million) for the first 12 months. Anglo American will also receive royalties for 24 months.
The option period commenced immediately and Anglo will have until 60 days after IOCA provides a base case financial model on the project to make a decision, or a later date agreed upon by both parties.
Alien Metals chief executive officer Bill Brodie Good said the agreement was an important milestone for the emerging iron ore project.
“The mandate letter provides a pathway to negotiate and agree the potential development debt funding and a 100 per cent offtake solution,” he said.
“This mandate letter supports our near-term production aspirations and, unlike conventional debt finance, the potential bespoke funding with offtake provides alignment between the parties for the pursuit of scale across multiple assets with a world-class counterparty.”
Good said the Alien Metals board was exploring pathways to reduce Hancock’s initial capital expenditure requirement from what was outlined in the October 2021 scoping study.
Hancock hosts an inferred mineral resource of 10.4 million tonnes at 60.4 per cent iron (Fe), while there is significant potential to discover more direct shipping ore (DSO) material with low impurities on the tenement.
Given Hancock’s DSO potential, Alien Metals is confident future production from the project will be highly sought-after.
While Anglo American hasn’t established a local iron ore presence, the company produces more than 60Mt of iron ore from South Africa and Brazil.