ASX listed Ironbark Zinc has chartered the world’s largest icebreaking ship to demonstrate its proposed logistical solution and validate the shipping route for its giant Citronen zinc project in Greenland.
The company says it has also received an encouraging level of interest in Citronen from a broad range of investors and is arranging site visits as part of the due diligence process.
Ironbark said in an update this week that the Nunavik ship, which can carry about 30,000 tonnes of cargo, will sail to Citronen in August.
Nunavik is normally used to service Canadian Royalties’ Nunavik Nickel Mine in northern Canada where it transports nickel and copper concentrates from the mine to market.
It was the first cargo ship to complete the Northwest Passage unassisted.
Ironbark plans to reach an agreement to lease vessels similar to the Nunavik to assist in the shipping of zinc and lead concentrates from the Citronen mine and bring fuel and consumables inbound.
On the financing side, the management said the Citronen data room has been open for several months now and the company has received an encouraging level of interest in the project from a broad range of potential investors.
Several site visits will be facilitated this year as part of the due diligence process for potential financiers. This is expected to include bankers, private equity groups and industrial groups.
Ironbark is also in talks with parties regarding contract mining, lease hire and it is also investigating the potential opportunity for a third party to build, own and operate the plant and equipment and lease it back. The company is looking to reduce its capital costs at Citronen by up to USD$150m and increase its projected IRR courtesy of a number of financing options that it is exploring.
Capital items that are potentially open to these opportunities include the power plant, mining fleet, processing plant and fuel farm.
Financing is likely to include a blend of debt, equity and possibly even a partnership or joint venture according to the company.
Ironbark has also drafted detailed portal and decline engineering plans to allow for site activities to begin this year.
This includes a portal and decline drive towards the first and highest grade underground ore source, the “Beach Zone”
These works, along with fuel delivery and servicing of the plant and equipment on site are aimed at supporting the proposed 2019 construction and mining plants.
Citronen, which is held under a 30 year mining licence, is one of the world’s largest undeveloped zinc-lead resources with a JORC Resource of 132 million tonnes grading 4.4% zinc and lead, or about 12.8 billion pounds of zinc equivalent.
An updated feasibility study completed in September 2017 presented compelling numbers based on a project with an initial 14-year mine life, a throughput of 3.3 million tonnes per annum and average annual production of 150,000 tonnes of zinc metal.
The net present value of the project was calculated at USD$909 million post tax, with an internal rate of return of 35%, also post tax.
Despite Citronen’s meaty USD$514 million capex tag, Ironbark says it can pay the capital back in just 2.5 years from cashflows derived from the project.
Separately, Ironbark has secured land access to some remote areas of its Captains Flat project in New South Wales and will mobilise a helicopter-borne electromagnetic survey operator as soon as possible.
This will provide the first, large scale and modern geophysical survey over Captains Flat, which hosts the historic Lake George mine and other prospective exploration targets.
Lake George produced 26.7 tonnes of silver, 16,100 ounces of gold and 3,841 tonnes of copper between 1882 to 1899. It was reopened in 1937 and up to the date of its closure in 1962, produced an additional 406,418 tonnes of zinc, 243,851 tonnes of lead, 27,230 tonnes of copper, 7.4 million ounces of silver and 220,000 ounces of gold.
By Matt Birney
