Ironbark Zinc Ltd (ASX:IBG) has revealed an updated feasibility study for its Citronen Zinc Project in Greenland, sharpening up the project economics with the NPV now exceeding US$1 billion.
The Citronen Project shows a highly profitable base metal development potential of global significance, with a large scale annual production of up to 200,000 tonnes of zinc metal.
Importantly, Citronen’s mine life of at least 14 years is defined only by the limits of drilling to date.
As such, one of the project’s most exciting aspects remains its exceptional exploration potential with identified mineralisation remaining open in almost every direction.
Key project numbers
- Net present value: US$1.034 billion (US$909 million post tax);
- IRR (internal rate of return): 36% (35% post tax);
- capital cost: US$514 million;
- 3.3 million tonnes per annum mine rate/ production up to 200,000 tonnes per annum zinc metal;
- site cost: US$0.52 per pound of zinc (payable, net of by-product credits)
- mine life: 14 years (open ended and with further inferred resources that could potentially be converted to reserves);
- life of mine revenue: US$6.36 billion; and
- life of mine operating costs: US$3.03 billion.
Project financing well-advanced
Ironbark is debt-free and has a strong shareholder base including Nyrstar NV (EBR:NYR) and Glencore AG.
Ironbark has inked an MOU with China Nonferrous Metal Industry’s Foreign Engineering and Construction Co (NFC) for an engineering, procurement and construction (EPC) contract.
The deal encompasses a 70% debt funding proposal through Chinese banks and provides NFC with a right to buy a 20% direct interest in the Citronen Project.
Citronen’s feasibility study with all the supporting studies has been presented to NFC for the purposes of preparing the EPC and financing work.
Ironbark is assessing the best financing pathway forward and is considering working with several potential partners.
Zinc prices highest in a decade
Zinc prices recently surged to their highest in almost a decade by expectations of strong global demand and tight supplies.
All in all, zinc is the fourth most widely-used metal in the world, trailing only iron, aluminum and copper.
Global consumption has reached 14 million tonnes annually, about half of which goes toward galvanization.
Galvanized coatings are widely used in marine equipment, water heater tanks, offshore oil pipelines, etc. But the two biggest end markets are automotive and construction.