Alien Metals Ltd (AIM:UFO, OTC:ASLRF) said its Australian iron ore subsidiary has granted Anglo American PLC (LSE:AAL) an exclusive right to negotiate project funding and offtake arrangements for the Hancock iron ore project.
Under an agreement with Alien’s wholly owned Iron Ore Company of Australia Pty Ltd, the global mining giant has the right to negotiate up to US$15mln in funding and 100% of offtake from the Hancock project in the Pilbara, Western Australia.
The agreement includes a US$10mln advance payment facility; a 100% offtake for sinter fines and lump from Hancock; and vessel prepayments for up to US$5mln for the first 12 months.
The exclusivity period of 60 days starts immediately.
Anglo American will receive an agreed royalty for 24 months.
Anglo American produces more than 60 million tonnes (Mt) of premium quality iron ore annually from South Africa and Brazil, but has no iron ore operations in Australia,.
"We are really pleased to have signed this mandate letter with a leading, global mining company of Anglo American's stature," said Alien chief executive Bill Brodie Good.
“This mandate letter supports our near-term production aspirations and, unlike conventional debt finance, the potential bespoke funding with offtake provides alignment between the parties for the pursuit of scale across multiple assets with a world class counterparty.”
Alien said it is assessing development plans at Hancock which may reduce the initial capital expenditure requirement outlined in the October 2021 scoping study.
In June, Alien announced that it was making good progress at its flagship Hancock project and that it was in preliminary talks with a number of potential funding partners.
READ: Alien Metals in talks with potential offtake and funding partners for Hancock iron ore project
Hancock hosts a JORC-compliant inferred mineral resource of 10.4Mt.