Scottie Resources (TSX-V:SCOT) has entered a binding term sheet for a US$25 million ($38.37 million) construction loan and overrun facility with privately held Ocean Partners UK.
The capital will be deployed to advance the Scottie Direct Shipping Ore (DSO) Project towards production.
Under the proposed terms, Ocean Partners will purchase 100% of resources from the project for the first eight years of production, allowing an equity investment of US$6 million equivalent to roughly US$8.4 million in charitable flow through funding.
The loan will be made available within the first six months of production with Scottie to begin repayments after a six-month grace period before subscribing to 18 monthly instalments at an interest rate of 12 months secured overnight financing rate (SOFR) plus 7%. Scottie will prepay 1% of the loan to lock in to the deal.
The partnership intends reducing operating and capital costs, and complexity by eliminating the need for grinding operations at the site, while expanding on a greater preliminary economic assessment (PEA) which Scottie expects to release in late 2025.
By the end of this year, Scottie will conduct drilling to convert its inferred resources to indicated, begin work for a baseline environmental study, and complete a Feasibility Study level of ore sorting, with subsequent milestones to be timeline after completion of its PEA.
Scottie CEO Brad Rourke says this agreement allows the company to develop the mine while instilling strong validation of the economics inherent.
“The substantial equity stake and the construction loan & overrun facility aligns the two companies with the common goal of producing a high-margin DSO product in the shortest period of time,” Rourke says.
The equity stake lists Ocean Partners as the largest shareholder of the company, allowing it to appoint a director to Scottie’s board after the first 24 months.
Ocean Partners CEO Brent Omland says the project is compelling for Ocean Partners due to its core trading nature of direct shipping ore.
“Producing a DSO product presents an accelerated path to production with a less intensive capital programme whilst maintaining robust project economics,” Omland says.
“We are excited to be forming a deep partnership with the Scottie team and look forward to the project advancing to production.”
Scottie Resources is focused on expanding known mineralisation at historically producing mines to produce high-margin DSO products.
Write to Maddison Elliott at Mining.com.au
Images: Scottie Resources
