Magnum Mining inks Saudi funding deal

Magnum Mining and Exploration (ASX:MGU) has struck a deal to snap up 50% of Saudi Arabia-based Middle East for Metallic Industrial (Midmetal) and jointly fund a US$410 million green pig iron production facility. 

The companies plan to work together to develop the pig iron-making facility, which will use HIsmelt-based technology. 

Magnum says the plan is for the HIsmelt plant to utilise high-grade magnetite concentrate from the company’s Buena Vista Iron Project in Nevada and mill waste from steel plants in the Arabian Gulf region. 

Shares in Magnum Mining and Exploration spiked following today’s news, up 25% to $0.020 as of 11am AEDT on 8 March 2023. 

Further, the two companies plan to use renewable biochar from Malaysia-sourced biomass as an iron reductant for the facility, allowing the proposed project to ‘leapfrog’ the expensive hydrogen iron reductant pathway being pursued by peers in the green pig iron space. 

In this vein, the Saudi shareholders of Midmetal have agreed to source up to 50% of the project’s development funding via loans from the Saudi Industrial Development Fund or other investors. 

This means it’s up to Magnum to source the remaining $205 million for the project’s development.

The company says it’s already in talks with ‘several’ investor groups that have shown an interest in helping fund the project’s development via either debt or equity arrangements. 

Further to this, Magnum reports that it has received 2 non-binding letters of support from international investors for the project, though the exact contribution to the funding is yet to be finalised and agreed. 

Magnum notes that there is, at this stage, no guarantee the company or Midmetal will be able to secure the funds necessary to develop the Saudi Arabian project. If funding can’t be sourced, the project may be scrapped. 

Nevertheless, Magnum CEO Neil Goodman says the company’s ‘maturing’ relationship with Midmetal has landed on a shared vision of how HIsmelt technology and the Buena Visa project could be developed in a ‘strongly economic and sustainable’ way. 

“The pathway forward is starting to crystallise by bringing into focus the opportunities that Midmetal represents. The intimate relationship that a joint shareholding facilitates will ensure the project has the very best chances of commercial success. 

Magnum anticipates the working relationship already established with Midmetal will continue to develop to the advantage of Magnum’s shareholders.”

While Magnum and Midmetal are yet to put together a full financial model for the pig iron facility project, Magnum says its board is satisfied that the project represents a ‘compelling business case for development’. 

Today’s news comes just 2 months after Magnum completed an engineering study for the pig iron project, as part of which it first flagged the $410 million development price tag. 

The HIsmelt technology was originally developed by Rio Tinto (ASX:RIO) from 1982 to 2017 to smelt high phosphorous haematite iron ore fines using non-coking coals as the reductant. 

Magnum holds a conditional HIsmelt patent application licence from Shandong Molong Petroleum Machinery Co (SHE:002490) and Shandong Province Metallurgical Engineering Co that allows Magnum to construct and operate HIsmelt plants. 

Images: Magnum Mining and Exploration
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Written By Joshua Smith
Joshua Smith has years of experience in the media sector, having worked as a markets reporter, features writer, and editor since completing a Communications and Journalism degree and a Creative Writing degree. Josh is an avid board game fan and a self-professed coffee snob.