Ironbark Zinc project validated by prospective cornerstone investor

Ironbark Zinc Ltd (ASX:IBG) has successfully concluded a Phase I due diligence period with US EXIM Bank and has received a Preliminary Project Letter (PPL) outlining EXIM’s intention to extend up to US$657 million in debt funding to Ironbark to cornerstone the development of the Citronen Project in Greenland.

Note further due diligence and EXIM board approval is still required and the company remains in a trading halt until tomorrow morning.

The Citronen Zinc Project has an initial 20-year mine life and the potential to rank as a top 10 global zinc producer.

IBG expects that with an advanced pathway to securing project financing, the project should attract widespread interest from a range of participants seeking to participate in its development.

Turning point for Citronen Project

“We are delighted to announce this US EXIM PPL, which marks a genuine turning point in the life of the Citronen Project, with proper recognition of the scale and quality of the asset from the capital markets for arguably the first time,” Ironbark managing director Michael Jardine said.

“We could not ask for a better prospective cornerstone than US EXIM; they will be an excellent partner for Ironbark and its stakeholders as we move forward into what will be another busy 12 months.

“The interest from a top tier financial institution further validates Citronen’s status as a Tier 1 zinc project and is a testament to the strong fundamentals offered by Citronen, as the company moves closer to becoming a strategic zinc producer.

“We have seen in the last six months, since Ironbark updated its BFS, a substantial shift in perception with respect to zinc and the role it will play in the future.

“Now officially a USGS Critical Mineral, the physical zinc market has also shown a formerly underappreciated tightness and we have seen the price respond in a reasonably sustained fashion in recent months. All these factors are flashing green when considering what a very long-life asset such as Citronen potentially offers the market.

“We look forward to updating the market on our progress throughout the first half of 2022, as we finalise our project financing package.”

Preliminary Project Letter 

EXIM worked with Washington based Greengate LLC, an independent financial advisory firm, to assess Ironbark’s application in relation to the development of the Citronen Zinc Project.

It used the initial Phase 1 due diligence process as a pre-requisite for obtaining final approval from the EXIM Bank Board. 

Ironbark submitted its loan application in August 2021 and since then US EXIM and its advisers have undertaken considerable due diligence on Citronen. 

The prospective credit is not yet binding, however, the Preliminary Project Letter (PPL) signals US EXIM’s intent to seriously consider Ironbark’s funding application and provides project sponsors with a process and issues list to resolve prior to a formal loan offer. 

IBG sees this PPL as a welcome endorsement of the fundamentals of the Citronen Zinc Project.

It comes at a time when zinc consumption is growing as the transition to carbon neutrality gains global traction.

With the amount of debt funding, IBG should need no additional project debt funding if the EXIM facility is successfully closed on the terms outlined in the PPL. 

The PPL also provides Ironbark with guidance on key issues for Phase 2 due diligence, including completing further financial, technical, environmental and legal reviews as determined by EXIM Bank (including finalisation of construction arrangements).

What’s next?

Phase 2 due diligence will commence in early 2022 and will be focused on addressing the points raised by US EXIM in the PPL. 

Further information will be provided on the key steps and timing of that process, including the means to obtain US EXIM board approval and subsequent drawdown, when confirmed between the parties.

IBG has also started to identify and consider prospective equity investors.

Story by ProactiveInvestors