PERTH (miningweekly.com) – ASX-listed Genmin has struck a royalty agreement with diversified major Anglo American, in relation to its Baniaka iron-ore project, in Gabon.
Under the terms of the agreement, Anglo American will pay $10-million to Genmin subsidiary Gabon Iron Ore (GIOL) in consideration for the grant of a royalty on sales revenue received from the sale of the first 75-million tonnes of iron-ore products produced and sold from Baniaka.
GIOL will have the option to buy back the royalty at any time at a price that delivers an agreed internal rate of return to Anglo American on the $10-million cash consideration.
Additionally, GIOL has granted Anglo American an exclusivity period of 120 days from the delivery of the Baniaka prefeasibility study (PFS) to conduct confirmatory due diligence, and negotiate and agree legally binding documentation for the provision of up to $75-million of funding for Baniaka, and an offtake agreement for up to 100% of iron-ore products from Baniaka.
“We are very pleased to have signed this agreement with a leading global mining company of Anglo American’s stature. We regard Anglo American as an ideal potential partner for us in achieving our goal of pioneering iron-ore production in Gabon in a sustainable way, given Anglo American’s heritage in Africa, and commitment to sustainable operations and activities as an iron-ore producer and marketer,” Genmin CEO Joe Ariti said.
“The $10-million consideration provides no dilution to our existing shareholders and will immediately boost our cash position. The agreement provides a mechanism to negotiate and agree in the medium-term potential development funding, and over the long-term an offtake solution. This agreement also supports our near-term production aspirations and, unlike conventional debt finance, the potential bespoke funding with offtake provides alignment between the parties for the pursuit of scale.”
Genmin has defined a mineral resource of 700-million tonnes at Baniaka, which includes a maiden inferred oxide and primary mineral resource estimate of 436-million tonnes for the Bandjougoy deposit.
“At 700-million tonnes, Baniaka is now by a large margin the biggest Joint Ore Reserves Committee mineral resource in Gabon for any commodity. We are starting to build a substantial magnetite inventory, which has significant intrinsic value with our locked-in, renewable, low-cost hydropower supply and increasing market demand for high-grade pellets to support decarbonisation of the iron-making process," Ariti said in May.
The Baniaka PFS is assessing the first ten years of processing detrital iron deposits and soft oxide material at an initial rate of five-million tonnes a year of iron-ore products, with subsequent expansion to ten-million tonnes a year.