Ironbark Zinc Limited’s (ASX:IBG) share price rocketed 69% in early trading after announcing the signing of a Letter of Intent (LoI0 with the Export Import Bank of the United States (EXIM) with regard to the Citronen Zinc-Lead Project in Greenland.
Managing Director Michael Jardine said that while the LOI is non-binding and does not represent an official commitment from EXIM, Ironbark views it as an important step in advancing a project financing plan for the development of the world class Citronen zinc/lead deposit.
The execution of this LOI represents the culmination of initial discussions between the parties in which the representatives of EXIM were made familiar with the project and Ironbark’s proposed development plans.
Key Commercial Terms
- EXIM is able to consider financing up to US$216,125,000 of the US content for the Project
- The LOI contemplates that a maximum loan term of 8.5 years will be made available to Ironbark
- Ironbark can select either a Guaranteed or Direct Loan. The interest rate for the Direct Loan option is set at the Commercial Interest Reference Rate (CIRR). The CIRR is the official lending rates of export credit agencies (ECAs). For USD loans, it is calculated monthly, and is based on the U.S. Treasury Rate. The current CIRR for transactions with a repayment period of 8.5 years is 1.46%.
- An initial expiry date of six months from signing of the LOI has been agreed. This can be renewed at Ironbark’s request at six-month intervals, for a maximum of two years
The execution of this LOI is another significant, and potentially transformational, milestone in the Ironbark journeytowards Citronen’s development and the long-promised move from developer to producer,” Mr Jardine said.
“Over the past six months, Ironbark has engaged with EXIM representatives to better understand each other’s business and to promote the alignment of our respective strategic goals, steadily building the foundations for a long- term relationship.
“The company could not ask for a better potential counterparty than EXIM, being the official export credit agency of the US government. EXIM’s mission is to support American jobs by facilitating the export of U.S. goods and services.
“We view Citrönen as representing a vanguard opportunity for U.S. exporters to participate in a major mining development in Greenland. EXIM has extensive experience in backing responsible mining developments and Ironbark looks forward to conforming with the bank’s high standards for environmentally and socially responsible mining.
“Ironbark intends to maintain this initial momentum by pursuing similar arrangements with other relevant ECA and commercial lenders.
“When the feasibility study is completed in early 2021 to a bankable standard, Ironbark will then seek to convert these preliminary arrangements into binding financing agreements for the development of Citronen.”
Permanent Secretary Jørgen Hammeken-Holm, Ministry of Mineral Resources, Government of Greenland, said the Government of Greenland is delighted to see EXIM’s expression of interest in supporting Ironbark, which reinforces the company’s longstanding commitment to the Citronen Project, and Greenland more broadly.
“As one of the country’s flagship resource projects, Citronen represents a unique near-term opportunity to diversify Greenland’s economic base and attract significant inbound foreign investment.
We are fully supportive of the Ironbark Board and look forward to continuing our good relationship with the Company as activity progresses further in 2021.”
The current Ironbark Board has consistently targeted 2021 for a Final Investment Decision (FID) on the development of Citronen, and whilst this timeline remains unchanged, the EXIM LOI builds momentum towards achieving that goal by:
- Creating a pathway to the establishment of EXIM as a finance provider for the Citronen Project;
- Crystalising the opportunity for further ECA and private sector participation from countries contributing substantial goods and services content to the Project;
- Using its EXIM exposure to leverage access to US capital markets, given the leading role EXIM plays in US commerce and banking; and
- Significantly raising the profile of the Citronen Project’s ability to potentially underpin other strategic commercial and research opportunities in the high Arctic of Greenland.