THE BOURSE WHISPERER: Perth-based NSL Consolidated has secured a low cost unsecured Convertible Note the company said will enable it to further underpin and expand its iron ore production at its Kurnool project in southeast India.
The Convertible Note has been entered into with Resources First Pte Ltd, a company related to a major Singapore-based bulk commodities investment and trading house and an Indian bulk commodities trading house.
NSL Consolidated has also entered into a Marketing Agreement with Resources First where the latter will market the company’s iron ore and procure sales contracts.
This can include Resources First directly purchasing the iron ore.
NSL Consolidated will retain the ultimate and final say to whom, and for what price the iron ore is sold.
“This package provides flexible, low cost expansion funding for our early iron ore production period,” NSL Consolidated managing director Cedric Goode said in the company’s announcement to the Australian Securities Exchange.
“It will allow NSL to potentially bring forward both the development of Phase 2 at Kurnool, and to fully focus on optimising production rates, as we are now more than fully funded for our requirements into next year.
“This is a welcomed development against a backdrop of highly cyclical commodity and equity markets domestically and globally, and delivers certainty to NSL’s bulk commodity strategy in our key iron ore production ramp-up period.
“It also provides a marketing edge and access to a wider pool of potential offtake customers, either through direct purchasing of our iron ore, or access to strong steel mill relationships and supply history.
Resources First has an existing strong presence in India and global iron markets.
“Importantly, the product Marketing Agreement is non-exclusive so there is no restriction on NSL’s own sales endeavours and success to date.”
NSL Consolidated recently commissioned its new Phase 1 iron ore dry separation plant at Kurnool in the southeast Indian state of Andra Pradesh.
It is now aiming to progress during the current quarter to ramp up towards the plant’s anticipated nameplate capacity of 200,000 tonnes per annum.
The company anticipates the second stage, Phase 2 wet beneficiation plant for Kurnool, capable of producing final product grades of between 58 to 62 per cent iron will be brought into operation later in the year with completion and anticipated sales in the first half 2013.
This is targeted to increase production capacity by an additional 200,000 tonnes per annum to an anticipated total of 400,000 tonnes per annum from Kurnool.