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IronRidge wipes out funding risk while retaining significant interest in Ewoyaa

Published: 13:08 01 Jul 2021 BST

IronRidge Resources Ltd -

It’s not often in the junior mining sector that you see a funding deal quite as attractive as the one just buttoned up by IronRidge Resources Ltd (LON:IRR) for its Ewoyaa lithium project in Ghana.

The IronRidge team, to be sure, know what they are doing.

Sitting behind chief executive Vincent Mascolo, himself a 25-year veteran of the industry, are Neil Herbert, who was instrumental in the billion dollar sale of Uramin fifteen or so years ago, and Nick Mather, the brains behind recent market darling Solgold.

This formidable team has helped propel IronRidge from small-time start-up to the £100mln company it is today. This next move looks set to turn it into a cash machine, given that the company is also set to spin out its highly attractive portfolio of gold assets shortly.

These too, have been showing every sign of delivering significant value to the company, as stellar gold intercepts, including from the potentially huge Zaranou project, keep rolling in.

The rate at which IronRidge has been drilling has been aggressive by any standard, and the hunger to make something out of the Cote D’Ivoire gold is palpable.

With the new partner at Ewoyaa, Piedmont Lithium (NASDAQ:PLL), making all the running and putting up all the money, IronRidge has now essentially cleared its decks.

But because it’s been able to retain such a significant interest in Ewoyaa, and because it’s free-carried into production, a very substantial amount of revenue is still likely to come IronRidge’s way at no further cost.

So, what is the deal?

Well, for US$102mln, payable at various stages, Piedmont has committed to bring Ewoyaa firstly up to the full feasibility stage, and then on into production. Construction at the preliminary economic assessment stage was estimated to cost US$68mln, and accordingly US$70mln of Piedmont’s commitment has been set aside for that. The rest goes on exploration, development and economic studies, with a subscription for US$15mln in IronRidge shares tacked on to boot.

That takes IronRidge’s total cashpile up to around the US$30mln mark, which for a junior exploration company represents real firepower.

For its part, Piedmont gets 50% of the Ewoyaa project at the end of the process and, which is perhaps more significant from its point of view, an offtake agreement for 50% of the spodumene concentrate produced over the life of the mine.

As it stands, the resource at Ewoyaa amounts to 14.5mln tonnes at 1.31% Li2O in the inferred and indicated categories. A recent scoping study showed the potential for a two million tonnes per annum operation with life of mine revenues exceeding US$1.55bn, and with significant potential to extend the mine life.

The average annual EBITDA was put at US$105mln, of which, given that it’s set to retain 50% of the project, a significant portion would be due to IronRidge.

Not surprising then that IronRidge chief Vincent Mascolo was quote as saying: “With the support and investment of Piedmont, along with the African mining expertise of IronRidge's major shareholder Assore Limited, we look forward with great excitement to developing this industry leading asset.”

He added: "This pathway to production transaction removes funding risks for IronRidge and its shareholders at a time where surety of supply to the enormous and rapidly growing North American electric vehicle and stored energy industry sectors is paramount.”

For his part, Keith Phillips of Piedmont said that Ewoyaa is “among one of the world's most promising spodumene projects”, and pointed to the benefits of existing world class infrastructure.

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