Ironbark Zinc Ltd’s (ASX: IBG) Citronen Zinc Project in Greenland became the world’s first stand-alone project application to qualify for 402 (A) Preferred Support status under the program recently introduced by the US government. for China and Transformational Exporting (CTEP), administered by US EXIM Bank.

This follows Ironbark’s positive Bank Feasibility Study (BFS) announced in July 2021 highlighting a strong economy, with the Citronen project of 3.3 million tonnes per year expected to generate free cash flow afterwards. taxes of US $ 1.46 billion at a zinc price of US $ 1.30 per pound. .

Indicative calendar 2021/22.

Program 402

The “China and Transformational Exports Program”, also known as Section 402, was added to EXIM Bank’s charter through legislation passed in late 2019.

The program sets EXIM the goal of reserving at least 20% of the agency’s total funding authority (US $ 27 billion out of a total of US $ 135 billion) “… terms and other conditions, to the extent possible, which are fully competitive with rates, terms and other conditions established by the People’s Republic of China or a Covered Country, which are intended to:

• directly neutralize export subsidies for competing goods and services financed by official export credit, tied aid or blended finance provided by China or other covered countries; and
• Advance the United States’ comparative leadership vis-à-vis China, or support U.S. innovation, employment, and technology standards, through direct exports in ten transformational export categories.

“Provides additional momentum to achieve our goal”

Ironbark Managing Director Michael Jardine said following the 402 (A) eligibility: “The strategic importance of Ironbark’s Citronen Zinc project to US interests is implicit in today’s first global confirmation. ‘hui of eligibility 402 (A).

“Our initial funding request for EXIM in the United States broke new ground for Ironbark in its quest to develop the Citronen Zinc project and today’s announcement provides further impetus to achieve our goal.

“I must point out that while our funding request is still being evaluated by EXIM, today’s announcement is encouraging, especially with zinc which has recently been added to the list of critical minerals for the company. ‘US Geological Survey. “

Jardine added: “About two years ago now, the new Ironbark Zinc Board of Directors embarked on a strategy to increase shareholder value by advancing the development of the Citronen Zinc project.

“This resulted in a complete review and update of the feasibility study of Citronen to bankable status, the granting of environmental permits in progress, the buyback of the royalty over the life of the mine production, the appointment of Bacchus Capital Advisers, the recent addition of new board members. , and of course, our decision to continue funding the development of the US EXIM project.

“We have accomplished a lot, and whatever the outcome of our loan application with EXIM Bank, our business is now in a much better position to shape our future. “

Bankable feasibility study

In July of this year, Ironbark released Citronen’s BFS, outlining a series of key metrics for the northern zinc deposit.

Modeling an operation of 3.3 million tonnes per year, the study describes how a zinc hub at Citronen could generate US $ 1.46 billion in after-tax free cash flow.

The project has an after-tax net present value of US $ 363 million, an internal rate of return of 15.2%, and requires US $ 654 million in capital expenditure.

Ironbark believes Citronen can produce 2.5 million tonnes of zinc over its 20-year lifespan, or an average of 130,000 tonnes per year.

It has already entered into two key off-take deals for the zinc deposit, both with major shareholders.

Trafigura Ltd is set to mine 35% of Citronen’s mining production life, while mining giant Glencore PLC (LSE: GLEN) is set to take 35% (including 10 years of lifetime zinc and lead production).

Glencore and Trafigura are the world’s largest and sixth largest zinc producers, respectively.

Main conclusions of the BFS.

At the time, IBG CEO Michael Jardine said: “The BFS 2021 update is the culmination of an intensive reassessment of the development plan for the Citronen project.

“It is a pragmatic and well-founded view of the asset that highlights the potential for development of Citronen into a major producer of zinc metal over several pricing cycles.

“This study addressed several challenges that required creative thinking, disciplined decision-making in terms of compromise, and a willingness to reconsider some long-held assumptions about the project.

“For these reasons, I am much more confident today than 12 months ago in the depth of our understanding and the solutions that are being offered.”

“There are few large, known near-surface SEDEX zinc ore deposits yet to be developed, let alone located in low sovereign risk countries like Greenland.

“Once built, Citronen will be a decades-old mine backed by the strength of the company’s existing offtake agreements. “

Citroën’s resources and reserves

Ironbark has established an ore reserve of 48.8 million tonnes for Citronen, based on a Mineral Resource Estimate (MRE) of 84.7 million tonnes.

More specifically, the MRE would contain 4.7% zinc and 0.5% lead. All details are described below:

Zinc Market Outlook

Ironbark continues to advance the Citronen property as the zinc market gains traction.

Fastmarkets analyst James Moore and reporter Ana de Liz said in October that the outlook for zinc demand appeared optimistic.

“As central banks around the world are scaling back their pandemic stimulus packages, we expect policy to remain generally accommodative.

“Large budget spending on infrastructure will spill over into the zinc market. And while the demand for zinc often correlates with traditional infrastructure expansions in the road and rail sectors, zinc will also play a strategic role in new energy infrastructure.

“We also expect some pent-up demand from the auto industry next year, after the semiconductor shortage has forced automakers to postpone and delay production this year.

“The persistent forward selling above $ 3,000 a tonne has acted as a barrier to price increases, but we believe prices will gradually strengthen, especially if investors start to anticipate late mine closures. life expectancies scheduled for 2022-2023, which will tighten the refined metal availability in the years to come.

Milestones continue to be executed.