Mount Gibson Iron has announced the signing of the third offtake agreement for the Iron Hill project located near the existing Extension Hill mine in the Mid West of Western Australia.
Under the 12 month agreement, SCIT Trading Limited – a subsidiary of Shougang Concord International Enterprises – will purchase approximately one quarter of the first year’s available annual production planned from the project.
Shougang Concord is held 47.78% of Shougang Holding (Hong Kong) which in turn is held 100% by Chinese state-owned enterprise Shougang Corporation.
Shougang Corporation is one of China’s largest state-owned steel producers and through indirect shareholding has effectively been an offtake partner and Mount Gibson’s second largest shareholder since 2009.
Mount Gibson Chief Executive Officer Jim Beyer said the agreement takes current iron ore commitments to over 70% of available production in the first year of operation, building on the company’s long-standing relationship with Shougang.
“The agreement further emphasises Mount Gibson’s excellent relationship with Shougang, which has been a strong and supportive shareholders and customer of our Company for many years,” he said.
“We look to further building on this relationship as Mount Gibson’s business continues to evolve.”
According to the company’s ASX release, the Shougang agreement is conditional upon regulatory approvals and project completion being achieved by 30 June 2017. It will also require shareholder approval due to Shougang’s 14.9% shareholding in Mount Gibson.
“A shareholder meeting to approve the agreement with Shougang is expected to be held sometime in April 2017. Further information will be provided in the Notice of Meeting at the appropriate time,” Ark told the ASX.
“As previously indicated, subject to final regulatory approvals, Mount Gibson aims to start development of the Iron Hill project in time to commence sales when remaining stockpiles of standard hematite from Extension Hill are exhausted in the first half of calendar 2017.”
The agreement also gives the buyer an option to extend the term for up to 12 months subject to available production constraints.