[miningmx.com] – EQUATORIAL Resources said it would fully fund its $230m, two million tonne/year (mtpa) iron ore project Mayoko-Moussanji during 2014 either by selling shares in the project or concluding an offtake agreement.
Other sources of finance would be traditional debt or by leasing out the rolling stock required for the Republic of Congo (RoC) project which would provide half of the total capital required, said John Welborn, MD and CEO of Equatorial Resources.
In an e-mailed response to questions, Welborn also didn’t discount the positive effect of Exxaro Resources developing its Mayoko-Lekoumou in parallel with Mayoko-Moussandji which are adjacent to one another.
“Obviously, another catalyst which will assist our financing discussions will be Exxaro successfully getting into production alongside us. I am confident they can sort out the delays with their negotiations with the [RoC] government,” Welborn said.
Exxaro may have to wait until a sitting of the RoC parliament before concluding a mining convention which it had first hoped would have been signed earlier this year. Macquarie Research said in a report Exxaro was “at the mercy of the politicians”.
Equatorial Resources today announced it had lodged a mining licence application with the RoC government in a ceremony which also included signing of a mining convention for the Mayoko-Moussandji project.
“The ESIA [Environmental and Social Impact Assessment] approval and mining licence approval, which we will work on from the beginning of next year, will be key catalysts for financing,” said Welborn.
“We own 100% of the project, have about $50m in cash and, at this stage, have no debt, no offtake arrangements, and no royalty arrangements other than jurisdictional so, notwithstanding the capital markets, we are in a strong position to secure finance,” Welborn said.
One prospect was the purchase of a direct minority or majority interest in the project related to offtake from China following “strong interest”. Welborn said this would see the project fully funded.
“We have also received strong support from our large institutional shareholders based on the fundamentals of the project economics,” he said.
“With iron ore prices continuing to out-perform expectations we are confident that 2014 will be the year to get the project fully funded on the pathway to production.”
