This is the first in a two-part feature series.
This article is a sponsored feature from Mining.com.au partner Ironbark Zinc Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Greenland is a large, remote, and barely habited island known not only for its frozen landscapes but also for viewing Aurora Borealis, otherwise known as the Northern Lights.
With scarce population and little pollution, Greenland offers more than just natural wonders.
Increasingly, the world’s largest island is becoming a geopolitical hotspot known for its other natural characteristics, not least of which is hosting critical minerals and in particular zinc. Zinc was recently added to the critical minerals list compiled by the US Geological Society (USGS) due to the blue-grey metallic element’s economic significance and importance in everyday life.
While zinc has endured a somewhat turbulent run over the past few years after hitting a 10-year high in 2018, it remains the 24th most common element in the earth’s crust and has a plethora of applications.
It’s also the 5th most traded metal globally and is critical to the world meeting net zero targets.
Capitalising on having its flagship project in such an underexplored, mineral-rich island with a competitive licensing framework, stable political environment, low investment risk, and pro-mining government, Ironbark Zinc (ASX:IBG) is on the way to becoming a large global zinc producer.
Managing Director Michael Jardine explains that the company’s flagship Citronen Zinc-Lead Project in northern-Greenland represents one of the world’s largest undeveloped zinc-lead resources.
Globally significant
Ironbark Zinc already has planned the project to have 20 years of mine life, which the MD says is expected to be extended.
“If we were operating today, we’d be the largest zinc mine in political Europe and supplying over 1% of world production. We’d have a top 15 zinc mine globally. This is a huge asset to be in the sole control of a $20 million company and seeing that value recognition improve is a key part of my job.”
“If we were operating today, we’d be the largest zinc mine in political Europe and supplying over 1% of world production”
The Citronen Zinc-Lead Project is located within the Lower Palaeozoic Franklinian basin of northern Greenland. It is made up of 3 deposits – Beach, Esrum, and Discovery. Hosting sedimentary rocks of the Amundsen Land Group, the project is located between the Harder Fjord Fault Zone (HFFZ) and the Trolle Land Fault Zone (TLFZ) regional structures.
The mineralisation is held within 2 fine-grained sedimentary units, with the majority comprising semi-massive net-textured to massive sulphides. Most of the mineralisation is of pyrite and contains sphalerite and galena. Sphalerite (zinc sulphide) is the primary ore mineral from which most of the world’s zinc is produced.
Greenland is ideal to host such an important project and is an attractive destination from both a mining and investment perspective, notes Jardine, who has a background in corporate finance, strategy development, and minerals marketing.
“Greenland is not just underexplored but truly unexplored and there are few, if any, geological terrains of the same scale left untouched anywhere in the world. Given its political stability as part of the Kingdom of Denmark, we think it’s a brilliant place to be looking for large, world-class ore bodies.”
In order to help Ironbark Zinc navigate its way to mining in ‘unexplored’ Greenland, the company brought onto its board former Foreign Affairs Minister Alexander Downer. While Greenland is supportive of mining in general and of the company, Jardine says it was a strategic move to tap into Downer’s international experience.
“We’re an Australian company operating under Greenlandic mining legislation, that is itself part of the Kingdom of Denmark and simultaneously trying to borrow substantial development capital from a US Government bank. Given that framework Alexander’s experience, contacts, and above all judgement is invaluable and I believe unique in the small cap space.”
Major interest for a major project
The US Government bank the MD speaks of is the Export-Import Bank of the United States (US Exim Bank), which is the official export credit agency of the US Government. In July, Ironbark hosted EXIM’s representatives on a site visit to Citronen, which was a key milestone prior to any final credit decision by the EXIM board. Ironbark’s prospective equity and operating partner, Norwegian group Leonhard Nilsen & Sønner, also participated in the site visit as part of its continuing due diligence process.
US Exim Bank’s support of the Citronen project and of the company follows that of global major commodities traders Glencore (LSE:GLEN) and Trafigura. The latter companies are top-4 shareholders in Ironbark and combined 70% offtakers for the Citronen Project.
Jardine says: “The stamp of quality that comes from having Glencore and Trafigura as Ironbark shareholders and offtakers is invaluable. They know zinc so well, have recognised the underlying asset quality and have both elected to support the business when it counts.
Likewise, US EXIM Bank, the last Australian mining company they backed was Gina Rinehart’s Hancock Prospecting during the very successful development of Roy Hill. We’re in esteemed company at this point.”
A class by itself
While it may be in esteemed company from an investment perspective, it appears Ironbark Zinc is in a class by itself when it comes to becoming the next major zinc producer.
The company’s Bankable Feasibility Study (BFS) shows that the Citronen Project has a resource in excess of 13 billion pounds of contained zinc and lead metal. The BFS highlights the project’s post-tax NPV of US$363 million, a mine life of 20 years, and post-tax-free cash flow of US$1.46 billion.
Jardine explains that Citronen is substantially de-risked with a granted mining licence, boasts a large JORC compliant resource and reserve, and the financial metrics of the project support a compelling case for any project, not least of which zinc.
“I think it’s underappreciated how many positive attributes Citronen has. Whilst the jurisdiction is largely unproven in terms of mining at a western scale, which will absolutely change in time, the project itself is almost boring in a good way.
The geology is simple, the proposed underground mining method – room and pillar – is well proven, processing will use industry standard methods and the concentrate will be super clean and able to be processed anywhere. We have no local communities to manage and all the typically contentious approvals are granted; environmental and social impact assessments are done and the impact benefit agreement signed off.
“We’ve been an excellent corporate citizen for the 15-years we’ve been in the country and have an excellent relationship with the government and people of Greenland”
We’ve been an excellent corporate citizen for the 15-years we’ve been in the country and have an excellent relationship with the government and people of Greenland. In fact, as part of our community consultation in Greenland Ironbark visited every single municipality in-country and they all voted for the project to proceed. Every single one of them.
That’s a compelling story in anyone’s language and explains why the company is so committed to seeing this project succeed.”
In part two of this series, the MD speaks to Mining.com.au of the Citronen Project’s sheer size and scale and how it gives Ironbark Zinc leverage through multiple price cycles.
He notes that in the September quarter, the zinc price traded between US$1.48/lb and US$1.54/lb, softening further after the end of the quarter. While macro uncertainty has continued to weigh on the metals market more broadly, the outlook for zinc looks positive, leaving Ironbark Zinc in a strong position to take advantage of the positive forecasted market dynamics.
Write to Adam Orlando at Mining.com.au
Images: Ironbark Zinc Limited & iStock
