THE BOURSE WHISPERER: Iron Road (ASX: IRD) told the market about the recent progress it has made towards forming long term off-take agreements it considers will underpin development of the company’s Central Eyre iron project (CEIP) in South Australia.
Iron Road declared it has signed five separate non-binding Memorandum of Understandings (MoU) with leading, globally involved Chinese steel companies, aimed at progressing long-term iron ore supply agreements for the CEIP.
The company explained that, at this stage, four of the Chinese companies have asked to remain anonymous for now, for reasons of commercial confidentiality, however, Iron Road is confident of their commitment to take up the agreements.
On a positive note, the company that can be identified, Shandong Iron & Steel Group Co Ltd (ShanSteel), has signed a further agreement, progressing its intention to enter into a Letter of Intent with Iron Road covering the supply of premium iron products to ShanSteel from the CEIP.
The ShanSteel Agreement also proposes ShanSteel and Iron Road will collaborate to seek a project funding solution to enable Iron Road to reach a final investment decision, in order to commence construction during 2017.
“Our high quality product from the CEIP offers significant advantages for steel mills intent on running the most efficient and environmentally compliant operations, hence the strong interest we have received from a number of parties,” Iron Road managing director Andrew Stocks said in the company’s announcement to the Australian Securities Exchange.
“The MoUs are aimed at establishing a detailed understanding of the commercial and technical benefits the CEIP product will deliver for steel mills, prior to entering a Letter of Intent for the long term supply of iron ore product from the CEIP.”