Rail Option Firming Up For WA Iron Ore Plans
Macarthur Minerals Limited (ASX: MIO) (TSXV: MMS) (OTCQB: MMSDF) has agreed terms with Aurizon, for the transport of direct shipment ore (DSO) at a rate of up to 500,000 tonnes per annum between West Kalgoorlie and Kwinana, Western Australia.
Macarthur’s combined rail position now extends the company’s potential access to rail haulage capacity in Western Australia to almost one million tonnes over the next 12 months, and up to 2.1 million tonnes in aggregate over four years, subject to securing matching port access.
• Macarthur enters into a rail haulage agreement with Aurizon for the transport of iron ore at a rate of up to 500,000 tonnes per annum between West Kalgoorlie and Kwinana.
• The term of the agreement is for 12 months and is subject to conditions including Macarthur securing matching port capacity and Aurizon satisfying regulatory approvals.
• Macarthur’s potential access to rail haulage capacity in Western Australia has expanded to almost 1 million tonnes over the next 12 months, and up to 2.1 million tonnes in aggregate over four years.
• DSO mine planning work at Ularring continues to be accelerated to allow Macarthur to target commencement of mining operations at the earliest available opportunity.
• The combined rail paths also provide an opportunity to export direct shipment ore (DSO) lump and fines products secured from GWR Group (ASX: GWR) under a recently announced mine-gate sale agreement.
• Macarthur aims to take the lead in continuing to open up export pathways in the Yilgarn region as it advances opportunities that can help it take advantage of current strong iron ore prices and deliver increased value for shareholders.
Increasing Macarthur’s aggregated rail access is critical to accelerating the Company’s early revenue objectives. The maximising of rail capacity is subject to successfully securing matching capacity at Fremantle and Esperance ports.
The company’s continued incremental approach to building rail access is both deliberate and strategic as it seeks to maximise opportunities for the export of iron ore products at the earliest available opportunity.
Key Agreement Terms
The rail haulage agreement with Aurizon requires the transport of a minimum of 450,000 tonnes over a term of 12 months and is subject to satisfaction of certain conditions precedent (which include Macarthur securing matching port access on commercially acceptable terms, and Aurizon achieving a number of regulatory approvals).
The agreement with Aurizon increases Macarthur’s potential contracted rail capacity in Western Australia to just under one million tonnes over the next 12 months (and up to 2.1 million tonnes in aggregate over the next four years).
Aurizon’s Bulk business is the largest transporter of Iron Ore outside the Pilbara. Rail Capacity is an important link in an emerging transport solution that will enable Macarthur to take advantage of the strong iron ore pricing conditions and target early revenue generation in the current commodity cycle. Macarthur’s early revenue generation targets include the export of GWR’s DSO products whilst the Company completes its planning mining, production and export of a DSO product from Ularring at the earliest available opportunity.
DSO and Magnetite Project Financing to be Accelerated
With Macarthur’s various production strategies now gaining material traction, the company is determined to accelerate its project financing. Anticipated cash inflows from Warrants During the course of September and December this year, a material number of in-the-money warrants are anticipated to be exercised.
Those warrant holders electing to exercise will be delivered an opportunity to consolidate their position, and this will in turn, provide the Company with funds to support the pursuit of revenue generating activities.
DSO Funding In response to material milestones being achieved on project and logistics planning, Macarthur now intends to accelerate arrangements for project financing to support DSO mining operations at Ularring.
Management has already advanced its pre-planning over the course of the last several months, and a funding process (at a yet to be determined future price) to support the debt/equity capital requirements for the DSO mining operations is being progressed.
The company is intending to open formal negotiations for mandates for the purpose of settling the engagements and structuring for the raise of required debt/equity funding to support future DSO mining operations.
Finally, the Company intends to open negotiations for a mandate (or mandates) to secure an early, conditional equity and debt funding deal that will enable Macarthur to progress towards first magnetite production following delivery of the current Feasibility Study.
Part of this funding would be allocated to necessary pre-production activities to streamline the delivery of the magnetite project.
Opportunities for an early combined funding solution that can support both the planned DSO mining operations and financing of magnetite mining operations through to first production are being actively pursued.
CEO, Andrew Burton, said the acceleration of Macarthur’s financing strategy is now firmly in motion as it strengthens its resolve to transition into production as quickly as possible.
“This agreement has the potential to increase Macarthur’s overall access to rail haulage capacity and enhances the foundations for the Company’s ambitions to commence iron ore exports as soon as possible. It is another pleasing step towards realising our objective to transition to revenue generating activities and Macarthur is delighted to be partnering with Aurizon,” Mr Burton said.
“With continued diligence, resolve and respectful engagement with key stakeholders, we remain very optimistic that it is now not a matter of if, but when, the Company will finally conclude the balance of the necessary arrangements that will enable it to commence moving and exporting iron ore products. This is only the beginning of the next phase of Macarthur’s journey – Walk with us and discover something big.”
For further information please visit: https://macarthurminerals.com/