Koch Metals highlights iron ore confidence with Tulla offtake deal
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Special Report: With iron ore appearing to regain ground, the time appears right for Koch Metals to reach a heads of agreement to acquire up to 400Mt of iron ore from Tulla.
Under the agreement, the private company has committed to purchase an initial 200Mt of iron ore from Tulla Resources’ (ASX:TUL) Norseman project and could buy a further 200Mt in four separate tranches.
This includes an option thereafter to purchase the life of mine iron ore from the project.
Koch will also provide Tulla with $42m to fund the exploration, development and mining of the iron ore over an initial three-year period.
After this, it will fund 65% of all iron ore project costs.
The off-take arrangement and funding is conditional on definitive agreements being finalised, Koch raising capital and being admitted to the London Stock Exchange, due diligence in relation to the iron ore assets and all necessary approvals being obtained.
“On behalf of myself and the Koch board, we are pleased to enter into the arrangement with Tulla Resources and look forward to a long and fruitful relationship,” Koch chairman Adam Giles said.
Koch is a private Australian iron ore company that holds the Constance Range iron ore project situated northwest of Mount Isa, Queensland.
The 438sqkm project currently hosts a 242Mt iron ore resource including 11.38Mt at 57.5% iron within EPM 26611, one of five exploration permits that make up Constance Range.
A offtake memorandum of understanding is already in place with a Vietnamese partner for 1.5Mtpa of iron ore while plans are afoot for more exploration to further define and expand the current resource.
The company is currently proposing a pre-initial public offering placement before it carries out an IPO on the London Stock Exchange in the first half of 2022.
This comes on indications that Chinese steel demand has held up reasonably well thanks to the infrastructure sector while weather issues have impacted on iron ore production coming out of Brazil.