Aim-listed Ironveld has signed heads of terms to acquire 100% of embattled Ferrochrome Furnaces’ (FCF’s) share capital.

Ironveld has a high-purity iron, vanadium and titanium project located in the northern limb of South Africa’s Bushveld Complex.

FCF, which is in business rescue, owns a mothballed smelter complex in Rustenburg, comprising four 2.5 MW electric arc furnaces and associated converters. Its total asset value stands at R98-million, or £5-million.

The agreement will see Ironveld acquiring the existing smelting facility, which provides it with an opportunity to start mining and processing in the short term.

Ironveld has agreed with the business rescue practitioners and forensic auditors associated with FCF to acquire the business for a nominal fee and pay its outstanding debt.

Ironveld will pay R15-million, or £750 000, upon completion of the acquisition and R100-million, or £5-million, over ten years, calculated as a percentage of profits from the smelter.

Its plans for the smelter complex include a nine-month refurbishment programme valued at about R40-million to R65-million, or about £2-million to £3.2-million.

Ironveld plans on refurbishing three of the furnaces to allow for 7.5 MW capacity, capable of processing about 40 000 t/y of magnetite ore – providing 20 000 t/y of high-purity iron 190 t/y of vanadium in slag and 3 800 t/y of titanium in slag as finished products.

The fourth furnace will be held in reserve for future refurbishment, with the potential to increase total processing capacity or for outsourcing.

Following refurbishment of the smelter facility, Ironveld will be able to produce and sell its key products (high-purity iron, vanadium in slag and titanium in slag), through its existing offtake contracts or marketing agreements.

First sales are expected within 12 months of completion of the acquisition.

Meanwhile, Ironveld has also signed a letter of intent with Enernet Global to build, own, operate and maintain a hybrid power plant using renewable energy, which will provide Ironveld with security of power supply on a capital-expenditure-free basis.

Ironveld CEO Martin Eales says the company’s existing offtake contracts and marketing agreement, as well as the necessary environmental and operational permits that are already in place, provide Ironveld with the ability to accelerate a pathway to production and cash flow far more quickly and at a lower cost than if it were to build a new smelter.