PERTH (miningweekly.com) – Mineral sands miner Sheffield Resources has inked a non-binding term sheet with Yansteel to form a joint venture (JV) at its Thunderbird project, in Western Australia.

Under the terms of the agreement, Yansteel will invest A$130.1-million to acquire a 50% stake in the project, with the transaction subject to the execution of formal agreements, as well as regulatory and shareholder approval.

The companies have also executed a take-or-pay offtake agreement for all of the ilmenite produced at the Stage 1 project.

“The JV with Yansteel, if completed, will provide the project equity presently estimated to fund Stage 1 of the Thunderbird project. The transaction with Yansteel also secures offtake for all of the ilmenite,” said Sheffield MD Bruce McFadzean.

In addition, the Sheffield board has also approved the issue of more than 34.25-million shares, comprising 9.9% of the post issue capital of Sheffield, to Yansteel for an investment valued at A$12.9-million.

The share placement is not conditional on the JV transaction, or Foreign Investment Review Board process completion.

McFadzean said that to attract a JV partner like Yansteel was testimony to the quality of the Thunderbird mineral sands project.

“This outcome achieves all of the objectives of the strategic partner process undertaken by Sheffield over the past 18 months and, if completed, will provide the means by which Sheffield shareholders can realise the underlying value of the project.”

Yansteel said in a statement that the company shared the same commitment as Sheffield to protecting the environment and creating employment and business opportunities for local and indigenous communities to benefit from the project development.

“We are supportive of the strong social licence and stakeholder engagement undertaken by Sheffield through the study, approvals and project financing process,” the JV company added.

The JV parties have agreed that the development concept for the Stage 1 project would be a 10.4-million-tonne-a-year mine and process plant producing a zircon-rich non-magnetic concentrate and ilmenite. The parties will agree on the final project scope, complete a bankable feasibility study and secure project financing.

The A$130.1-million project equity investment, along with the A$12.9-million funding under the share placement, combined with existing project financing, is expected to deliver a fully funded project.