- Fe’s (FEL) wholly owned Wiluna FE subsidiary pens an exclusive offtake agreement for the JWD Project in Western Australia
- The deal with Glencore International covers the offtake of all iron ore lumps and fines produced at the mine over the life of FEL’s operations at the site
- Glencore will put down a more than $10 million prepayment within five working days of signing, to be repaid by FEL in instalments
- Fe Executive Chairman Tony Sage says the prepayment gives the company valuable liquidity as operations ramp up to full capacity
- FEL shares are up by 4.5 per cent to 11.5 cents each at 10:47 am AEST
Fe’s (FEL) wholly owned Wiluna FE subsidiary has penned an exclusive offtake agreement for the JWD Project in Western Australia.
The deal with Glencore International covers the offtake of all iron ore lumps and fines produced at the mine over the life of FEL’s operations at the site.
However the arrangement remains subject to Fe’s joint venture partner and ASX-lister GWR Group’s (GWR) existing right to purchase up to 50,000 tonnes of fine product at the mine gate.
Under the deal, Glencore will provide FEL with a US$7.5 million (A$10.16 million) prepayment within five working days of signing. Fe will be required to repay this amount in five instalments of US$1.5 million (A$2.03 million), plus interest, from shipments two to six, or within six months of the prepayment’s receipt — whichever comes first.
Notably, sales under the contract will occur on a “free on board” basis to further assist FEL’s cashflow, meaning the company will not have to fund the cost of freight.
The agency-style arrangement will see Glencore fund the purchase of product upfront with both parties working together to optimise its placement with end users to achieve the best price.
Fe Executive Chairman Tony Sage said FEL was pleased to secure a major company such as Glencore as its offtake partner for JWD.
“It is a great vote of confidence in our project and the team, particularly given they have been willing to make a prepayment,” he said.
“The prepayment facility will provide us valuable liquidity as we ramp up our operations to full capacity.”
Fe’s operations are continuing to gain momentum toward full capacity with finished product stocks accumulating at the Port of Geraldton ahead of the first shipment.
At present, Fe owns 60 per cent of the JWD Project with GWR Group holding the remaining 40 per cent stake.
FEL shares were up by 4.5 per cent to 11.5 cents each at 10:47 am AEST.