Sheffield Resources Ltd (ASX:SFX) has signed definitive binding agreements with potential joint-venture partner YGH Australia Investments Pty Ltd (Yansteel) for the latter’s proposed $130 million investment to acquire 50% of the Thunderbird Mineral Sands Project in WA.
Both parties have started the process to satisfy the conditions precedent including lender agreement and receipt of the $130 million investment from Yansteel to finalise the formation of a joint venture, which is likely to be completed in coming weeks.
After forming the JV, a final bankable feasibility study will be completed ahead of concluding project finance arrangements and an expected final investment decision (FID) during 2021.
“Exciting step forward”
Sheffield managing director Bruce McFadzean said the signing was a major milestone towards the development of the Thunderbird Minerals Sands Project.
He said: “This is another exciting step forward for Thunderbird, our partnership with Yansteel, and for Sheffield Resources’ investors and stakeholders.
“In Yansteel we have a partner that is equally committed to the project and we are both looking forward to a long and productive relationship.
“What is particularly pleasing is that both parties are committed to creating hundreds of jobs in the Kimberley, for decades to come.”
Taurus will work collaboratively
As part of finalising the financing arrangements for the joint venture, Sheffield and Taurus Funds Management Pty Limited agreed to terminate their existing financing agreements and agreed to work collaboratively with the JV towards new financing agreements with the joint venture.
Taurus executive director Mike Davies said: “Taurus looks forward to working with Yansteel and Sheffield to assess and consider new financing facilities for Thunderbird.”
Thunderbird JV
In August 2020 Sheffield and Yansteel executed a non-binding term sheet for the formation of a 50:50 JV to own and develop the Thunderbird project and adjacent tenements on the Dampier Peninsula.
Under the terms of the agreement, Yansteel will subscribe for a 50% interest in the joint venture and provide $130.1 million in project equity funding, and Sheffield will fund any project equity shortfall between $130.1 million and $143 million, less project costs incurred before an FID.
The JV will secure project finance and, if required, project equity over $143 million will be funded 50:50 by Yansteel and Sheffield.
Yansteel offtake agreement
Both companies have entered a binding life of mine take or pay offtake agreement for 100% of the LTR ilmenite from stage 1 at market price and Yansteel having a first right of refusal to purchase ilmenite from later stages.
Yansteel is a wholly-owned subsidiary of Tangshan Yanshan Iron & Steel Co Ltd, a privately-owned steel manufacturer headquartered in Hebei, China, annually producing about 10 million tonnes of steel products and with annual revenues of A$6 billion.