THE BOURSE WHISPERER: Ironbark Zinc has entered into a US$50 million convertible note funding facility and offtake facility following a transaction with a wholly-owned subsidiary of Glencore International.
Ironbark said the transaction complements the work the company is undertaking to advance its Citronen base metals project in Greenland to production.
The funding aspect of the transaction will place Ironbark in a strong financial position at a time when the company said it considers considerable external growth opportunities exist.
“Glencore has a successful record of identifying, securing and funding base metal projects,” Ironbark Zinc said in its ASX announcement.
“The majority of Ironbark’s Board is confident that the relationship with Glencore and the provision of the facility by Glencore offers significant benefit to Ironbark and will assist Ironbark to maximise value from its current assets and secure new growth opportunities, consistent with its growth ambitions.”
The facility part of the transaction will provide Ironbark with access to funding that will allow it to pursue growth opportunities.
The company intimated that this could involve the acquisition of new assets, or companies that have base metal assets, in jurisdictions where Ironbark does not currently operate.
This would allow the company to diversify its operations as well as to broaden its commodity and geographic focus.
Ironbark said the timing of the facility was also fortuitous given current global financial uncertainty resulting in growing opportunities for well-funded companies to expand.
The majority of the Board considers being able to offer cash-on-the-table consideration to secure base metal projects, something the facility would allow it to do, as highly a valuable option in the present market.
Ironbark said it expected the new deal would strengthen its relationship with Glencore, which currently holds 11.974 per cent of Ironbark’s shares.
“The transaction secures favourable offtake arrangements with Glencore in respect of a portion of Ironbark’s production from the Citronen project and offtake or marketing arrangements in respect of non-Citronen production, which includes any production capacity acquired, in whole or in part, with funds drawn down under the facility,” Ironbark said.
“Securing offtake allocations to a counterparty of Glencore’s standing provides increased certainty and credibility to the Citronen project.
“Importantly, a proportion of the Citronen offtake has also been preserved by Ironbark for future dealing.”