THE BOURSE WHISPERER: Sherwin Iron (ASX: SHD) has signed an MOU with Genesee & Wyoming Australia (GWA) for the purpose of defining a framework for a definitive long-term rail service agreement.
GWA is a provider of above rail freight services in South Australia and the Northern Territory and owner of the Tarcoola to Darwin railway.
Sherwin Iron said it had been working with GWA on this project for the last eight months.
“We welcome this milestone as this is just one more building block that Sherwin has put in place to enable us to get into production, which is tentatively set for the end of his year,” Sherwin Iron chairman Barry Coulter said in the company’s announcement to the Australian Securities Exchange.
“Due to the extensive amount of ground work that GWA have put into getting to this point we are hopeful that we will be in a position to enter into the Rail Haulage Agreement within the next two months.
“Upon satisfaction of certain conditions precedent in the Agreement, GWA and Sherwin can then commit to the necessary capital works and source the additional rolling stock required for the Sherwin Iron product.”
The key points of the MOU are:
Sherwin Iron and GWA are to negotiate a Rail Haulage Agreement whereby GWA will provide rail haulage and ancillary services for the transport of 3 million tonnes per annum of iron ore from Sherwin’s Roper River tenement;
Sherwin Iron will accept the service under the Agreement on a take or pay basis;
Sherwin Iron may be required to provide funding for construction of essential track infrastructure and
The term of the Agreement is a minimum of 10 years.
The MOU will terminate upon entering into the Agreement, by mutual consent, by either party giving five days’ notice to withdraw from the MOU or two years from the commencement date of the MOU, whichever is earlier.