Australian resource company Ironbark Zinc (ASX:IBG) reports it has found no ‘red flags’ during a US EXIM Bank funding due diligence process regarding the Citronen Zinc-Lead Project in Greenland.
The company says due diligence remains incomplete with most of the work conducted in 2022 focusing on financial, technical, environmental and social categories, which Ironbark considers to be the main risk elements of a mining project.
It also reports diligence work on market and shipping has not begun and no ‘key’ commercial elements have been fully interrogated given the state of maturity of the project.
A full technical and E&S risk tables have also been prepared, which found no issues the company could not work around.
Ironbark Zinc Managing Director Michael Jardine says the successful conclusion of the 2022 EXIM due diligence program is a welcome step for Ironbark after many months of hard work behind the scenes.
“Whilst the aspirations we held at the beginning of the year have no doubt been delayed, the key messages here are overwhelmingly positive”
“Whilst the aspirations we held at the beginning of the year have no doubt been delayed, the key messages here are overwhelmingly positive, no fatal flaws yet identified, gaps exist but are relatively minor and EXIM remains committed to working with Ironbark.
This is overall an excellent outcome for the company and we’re now more informed than ever before about what a successful outcome needs to look like.
The time we will now take to work through EXIM’s due diligence findings also allows us to revisit and refine our equity pitch. Citronen is already a very large, long life critical minerals asset with the ability to operate through multiple price cycles. Permitting is largely de-risked and 70% of offtakes are already committed to global super majors Glencore and Trafigura; there are simply not many projects like this.
With time now on our side to dedicate to further field work, the board strongly believes the very robust known base can and will be improved before a new Final Investment Decision (FID) target date is set.
Combining the 2 parallel work streams, debt de-risking and potentially improved equity returns presents a compelling new proposition for Ironbark to take to prospective joint venture (JV) partners.
Given the scale of the asset, in terms of the balance sheet and operational strength required to execute, finding the right partner will be an important step in the road to eventual success.”
Ironbark states the main work streams flagged in the risk tables that require further attention include infill drilling in the Esrum Zone to upgrade resource tonnes from inferred to measured and indicated, as well as additional geotechnical drilling including in the proposed infrastructure zones.
The company will also be collecting new flora, fauna, hydrology and hydrogeology data, and will also be completing a more recent stakeholder and social engagement consultation.
In Ironbark’s view, infill drilling at Esrum is a relatively low risk exercise and states it may not affect the bankability of the project in its start-up phase given where Esrum sits in the schedule, but it does have the potential to lift the reserve life from the current 14 years to up to 20 years. This will allow for a much-extended loan tenor to be negotiated (currently proposed for 8.5 years) which will ‘strengthen’ overall project cash flows.
The company reports expectations around the scope and quality of data required regarding all environmental, social and governance (ESG) related issues have increased ‘substantially’ since most of Ironbark’s fieldwork was completed between 2007 and 2011. As such, Ironbark sees this as a largely procedural issue with no new issues being identified through the due diligence, rather additional longitudinal data now needs to be captured.
Ironbark says it also enjoys ‘very strong’ relationships in-country and as part of its EIA and SIA approvals the project received the official support of every municipality in Greenland. It also states Citronen was the first and is still the only mining project to have obtained such a ‘definitive’ signal of support from communities in Greenland.
Meanwhile, the company reports it has elected to conduct further stakeholder engagements to add more ‘robustness’ to its social licence, which will be completed in a single season subject to funding being available.
Ironbark also reports discussions regarding a Memorandum of Understanding (MoU) with Noway based Arctic specialists LNS A/S signed in May is progressing and will continue into the March quarter of 2023.
The MoU contemplates various commercial arrangements including LNS either acquiring or earning a stake in the project along with being granted preferred contractor status for several ‘key’ commercial elements including logistics, civil construction and mining.
Ironbark also states the recently completed due diligence program has given rise to a new, much more targeted JV partner search that will be a key priority in the coming quarters, and any JV transaction is likely to focus initially on funding for upcoming field seasons.
Ironbark Zinc is an ASX-listed resource company focused on its flagship Citronen project in northeast Greenland. The company also holds 2 base and precious metal projects in southern New South Wales, consisting of the Captains Flat and Fiery Creek projects.
Images: Ironbark Zinc Limited
