Wrap Text
US$12m BFS Financing Agreement with Principle Monarchy Investments, South Africa
FERRUM CRESCENT LIMITED
(Incorporated and registered in Australia and registered as an external company in the
Republic of South Africa)
(Registration number A.C.N. 097 532 137)
(External company registration number 2011/116305/10)
Share code on the ASX: FCR
Share code on AIM: FCR
Share code on the JSE: FCR
ISIN: AU000000WRL8
5 May 2015
Ferrum Crescent Limited
("Ferrum Crescent", the "Company" or the "Group")(ASX: FCR, AIM: FCR, JSE:
FCR)
US$12m BFS Financing Agreement with Principle Monarchy Investments,
South Africa
Highlights
- MOU signed with Principle Monarchy Investments (Proprietary) Limited
(“PMI”), whereby PMI will acquire 39% of the Moonlight Iron Project in
Limpopo Province, South Africa, through subscription for Ferrum Iron Ore
(Proprietary) Limited (“FIO”) shares
- FIO is a 97% owned Group company that holds the Moonlight Iron Project
- The Moonlight Iron Project involves the mining and beneficiation of the
Moonlight Deposit to produce a high grade concentrate to be transported to a
pellet manufacturing facility at or near the town of Thabazimbi in Limpopo for
the production there of direct reduction (“DR”) and blast furnace grade iron
pellets for export and domestic sale
- PMI is a BEE controlled South African company with extensive commercial
interests in South Africa (“BEE” is the term used within South Africa to
describe entities that meet relevant regulatory criteria as being controlled by
historically disadvantaged South Africans)
- Total subscription proceeds of R142m (US$12m) to be applied in carrying out
the bankable feasibility study (“BFS”) for the Moonlight Iron Project
- Payments to be made through 3 tranches with key milestone triggers for
release of capital
- Interim BFS funding of R2m per month to be provided until payment of first
R30m tranche – MOU binding upon receipt of the first of these R2m payments
- Ferrum Crescent team to continue BFS work, next key stages:
o Domestic steel market supply survey
o Large scale pit design and sampling work and assessment over need
for bulk sampling
o Definitive metallurgical testing for full process design.
- Development on schedule to benefit from new regional/national infrastructure
developments
- Full assessment of domestic supply options will position Ferrum as an
economic development partner to the Republic of South Africa (“RSA”)
Ferrum Crescent, the direct reduction (DR) grade pellet project developer, today
announces that it has signed a memorandum of understanding (“MOU”) with
Principle Monarchy Investments (Proprietary) Limited (“PMI”), whereby PMI will pay
R142m (US$12m) to acquire 39% of Ferrum Iron Ore (Proprietary) Limited (“FIO”).
The incoming funds will be used by FIO towards the bankable feasibility study (“BFS”)
costs for the Moonlight Iron Project, located in Limpopo Province, South Africa. In
return for the US$12m consideration, to be paid across three tranches, PMI will
receive a total of 39% of FIO equity.
Under the MOU, payment of the first tranche must be made within 6 months. In the
meantime, PMI will pay FIO a total of R2m per month, with the first of these
payments to be made by 1 June 2015, so that the FIO operational team will be able
to continue work on the BFS in close consultation with PMI. PMI will then continue to
pay R2m per month until payment of the first tranche of R30m, which must be paid
by 1 December 2015, with the monthly payments to be credited towards this first
tranche.
The MOU will become legally binding upon payment of the first R2m. In the event
that this MOU is terminated by FIO because of PMI’s failure to make payments when
they are due after the first payment of R2m, PMI will be obliged to pay liquidated
damages to FIO of R6m.
Ferrum Crescent has been negotiating with PMI and other BEE controlled parties for
some time to achieve a significant BEE investment in the Moonlight Iron Project. To
this end, the Company has entered into the MOU with PMI in addition to putting
additional contractual, but non-binding, arrangements in place with two separate
BEE groups that wish to invest in the Moonlight Iron Project. Though both of these
arrangements allow the Group to terminate or walk away from the proposed
transactions, they remain in place should the unlikely event occur that PMI either
fails to make the first R2m by 1 June 2015 or thereafter breaches the terms of the
MOU and it is terminated. These separate contractual arrangements involve
subscription in FIO shares for the Rand equivalent of US8m and the completion of
the Moonlight Iron Project BFS, respectively.
Commenting today Tom Revy, Managing Director, said: “We have now secured a
highly credible BEE partner within South Africa to fund the key elements of the BFS
for the Moonlight Iron Project. Moonlight is being progressed as a new source of
high grade DR grade pellet and is located in the well-developed infrastructure region
of northern South Africa. I cannot stress enough the importance of Moonlight as a
high-grade product source with easy routes to both domestic and international steel
markets. Our focus on providing the RSA steel industry with a new source of high
grade iron pellet has been an important focus for the company in 2015 and I look
forwarding to announcing further news shortly. This is a huge achievement by the
team and I would like to thank everyone for their help in delivering this goal.”
For more information on the Company, please visit that website or contact:
Australia enquiries: UK enquiries:
Ferrum Crescent Limited Ferrum Crescent Limited
Tom Revy T: +61 8 9367 5681 Laurence Read (UK representative)
Managing Director T: +44 7557672432
RFC Ambrian Limited (Nominated Adviser)
Andrew Thomson/Oliver Morse
T: +61 8 9480 2500
Beaufort Securities (Broker)
Elliot Hance
+44 (0)20 7382 8416
South Africa enquiries: JSE Sponsor
Bravura Capital (Pty) Ltd
Doné Hattingh
T (direct): +27 11 459 5037
Notes to Editors
Ferrum Crescent’s principal project is the Moonlight Iron Project located in Limpopo
Province in the north of South Africa. The Moonlight Deposit (upon which the
Moonlight Iron Project or "Moonlight" or the "Project" is based) is a magnetite deposit
located on the farms Moonlight, Gouda Fontein and Julietta and is the main
operational focus for the Company. Iscor, which explored the Project in the 1980s
and '90s, reported mineralisation, capable of producing a concentrate grading 68.7%
iron. At the time, Iscor concluded that the deposit, which was described as
comparable to the world's best, was easily mineable due to its low waste-to-ore ratio.
The beneficiation attributes of Moonlight ore are extremely impressive, with low-
intensity magnetic separation considered suitable for optimum concentration.
Metallurgical tests of Moonlight material, undertaken since by Ferrum, suggest that
Iscor's results are conservative, that good metal recoveries can be achieved, and
that the resulting concentrates have a high iron content and only negligible
impurities, at grind sizes considered to be the industry standard (P80 of 75 – 125
microns).
Key features of the Project are:
- JORC (2012) compliant Mineral Resource;
- Historical drilling, drilling by the Group, geological modelling and high density
geophysical survey conducted by the Company in 2012 confirm tonnage
upside potential;
- 30 year Mining Right granted;
- Environmental licence (EIA) in place for the Moonlight mining area (approved
4 April 2013);
- Metallurgical test work indicates the potential for high quality pellets in excess
of 69% iron and low deleterious elements possible (DR grade pellets for use
in direct reduction iron/electric arc steel-making processes);
- Low stripping ratio; slurry pipeline>pellet plant at rail head (Thabazimbi);
export through Richards Bay;
- Duferco offtake partner (4.5 Mtpa plus first right on 1.5 Mtpa if not sold
domestically);
- Independent valuation 2014 – The Mineral Corporation's independent
valuation of the Project released to the market on 11 June 2014;
- Located near Kumba railhead at Thabazimbi (Kumba operation depleting in
grade), Limpopo Province, northern South Africa;
- New Eskom power (4,800MW) commissioning first 800MW module;
- Richards Bay port expansion for iron ore products.
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