Ironbark Zinc in the lead to build Greenland’s first large-scale mine
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Ironbark Zinc continues to tick the boxes in rapid succession as it gets closer to the development of its Citronen zinc-lead project and establishing Greenland’s first large-scale mining operation.
Ironbark Zinc (ASX: IBG) continues to put distance between itself and its in-country peers with a decision on initial cornerstone debt funding for the Citronen project on the horizon.
Ironbark has lodged a loan application with the official Export Credit Agency of the United States, EXIM Bank, to cover $US216m of Citronen’s development costs, which if approved is expected to unlock significant financial support for the project’s development.
“The EXIM Bank opportunity is significant, and it is pleasing that Citronen now has the opportunity to prove its worth,” Ironbark managing director Michael Jardine says.
“There are few, if any, more shovel ready large zinc projects in the market today than Citronen, certainly none on the ASX. With a decision point coming in the fourth quarter this year, the time to be an Ironbark shareholder is right now.”
The US export bank is a big backer of significant mining projects, having provided $700m in financing to Hancock Prospecting’s Roy Hill iron ore mine in Western Australia.
In recent months, Ironbark has completed a series of other milestones on the path to production, including receiving the last of the permits required for development, delivering an ore reserve upgrade and the completion of a bankable feasibility study that confirmed robust project economics.
“Citronen has been substantially de-risked already. Reserves and resources are in place, 100% owned exclusive mining licence, BFS done, offtakes done with global majors Glencore and Trafigura, who are also IBG shareholders, and the company is now in formal project financing discussions with EXIM Bank.
“Large base metal projects take time to bring to market and Citronen has been no different, but that long lead time is now an advantage as we enter this final critical phase.”
The Citronen project, which is expected to produce 3.3 million tonnes each year of zinc and lead over 20 years, has strong government support in Greenland given it is the first large proposed mining project to reach the final permitting stage.
At a zinc price of $1.30 per pound, conservative estimates place the net present value at $363m, internal rate of return at 15.2% and life of mine post-tax-free cash flow at $1.5bn.
And there is still plenty of upsides, with every 10c increase in the zinc price adding $150m to the net present value and $360m to post-tax-free cash flow.
Citronen has the potential to displace Tara in Ireland as Europe’s largest operating zinc mine.
EXIM’s interest in helping fund the development of Citronen reflects the project’s potential scale as well as the impact to US exporters, Greenland and zinc end users.
Greenland is garnering quite a bit of attention from major American investors like Bill Gates, Jeff Bezos and Ray Dallio, who have all injected cash into KoBold Metals in support of the company’s exploration ambitions in the country.
And increasing pressure to shift to a low carbon world will see zinc become an important component of the transition. For example, there is 25% more zinc used per installed kilowatt of solar capacity than copper.
“Greenland is a Tier 1 ESG jurisdiction given it is part of the Kingdom of Denmark,” Jardine noted.
“Indeed, Citronen is a prime example of the opportunities inherent to the country as orebodies still exist that would almost certainly have been mined out by now in most other jurisdictions. However, we have the chance to build and operate the project to the highest possible ESG standards, which is a good thing.
“On carbon intensity, zinc will play a significant role as the world moves towards a lower carbon future and today’s presentation has put forward some specific examples of where and how this could play out, further supporting the case for Citronen to move into development now.”
Europe alone is expected to import an average of 1.3 million tonnes of zinc metal each year out to 2023. Wood Mackenzie predicts zinc demand will grow fivefold by 2040.
This article was developed in collaboration with Ironbark Zinc, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.