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Striking while the iron (ore) is hot at Paulsens East
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Special Report: A “substantially oversubscribed” $4m capital raise will advance Strike Resources’ (ASX:SRK) low cost, high return Paulsens East iron ore project towards production in 2021.
Iron ore is booming. Pilbara-based Strike is preparing to take advantage, targeting production of 1.5 million tonnes per annum direct shipping ore (DSO) operation for an initial four years, kicking off next year.
A recent feasibility study estimates net cashflows of $167 million at the low-cost project, based on a $US100/t iron ore price.
Prices are currently closer to $US126/t.
This $4m cash injection will allow Strike to advance with prep works so it can quickly mobilise to site and accelerate ASAP towards production once permits and approvals are granted.
These works include detailed engineering designs for the proposed haulage road and mine infrastructure and entering into early commitments for certain long-lead time items and equipment.
For investors, a number of key development catalysts are expected shortly including results of the bulk metallurgical test work; finalisation of all approvals that would see the granting of a mining permit to start construction; and the finalisation of offtake agreements.
“With the feasibility study now completed, this capital raising allows Strike to continue to advance the development of Paulsens East iron ore project, capitalising on the current strong iron ore price,” Strike managing director William Johnson says.
“Paulsens East continues to offer investors exceptional upside exposure to the strengthening iron ore market.
“The results of our recently completed feasibility study demonstrated that Paulsens East is a very attractive project, with the potential to generate in excess of $270m in pre-tax free net cashflow should iron ore prices remain at their recent $US115/t levels over the initial four year life of mine.”
This article was developed in collaboration with Strike Resources, 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.
