REG - Alien Metals Limited - Agreement for potential Hancock Project finance

Alien MetalsAnnouncement

31/08/2022 07:00

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RNS Number : 6817X  Alien Metals Limited  31 August 2022

 

 

Trading Symbols

AIM: UFO

FWB: I3A1

31 August 2022

 

Alien Metals Ltd

("Alien" or "the Company")

 

IOCA signs agreement with Anglo American for exclusive right to negotiate up
to US$15m project funding and 100% offtake

Alien Metals Ltd (LSE AIM:UFO), a global minerals exploration and development
company, is pleased to announce that it has, through its wholly-owned
subsidiary Iron Ore Company of Australia Pty Ltd ("IOCA"), entered into a
mandate letter providing for an exclusive right to negotiate project funding
and offtake arrangements ("Mandate Letter") with Anglo American (LSE: AAL;
JSE: AGL), in relation to the Hancock iron ore project ("Hancock") located in
the Pilbara, Western Australia (Figure 1)

Highlights:

·      IOCA has granted Anglo American an exclusive right to negotiate
and agree terms with IOCA for up to US$15 million in funding and 100% of
offtake from the Hancock Project, including:

•     US$10,000,000 in Advance Payment Facility

•     100% Offtake for Sinter Fines and Lump from the Hancock Project

•     Offtake terms to include vessel prepayments for up to US$5,000,000
for the first 12 months

·      Anglo American to receive an agreed royalty for 24 months.

·      Exclusive right commences immediately and will conclude the
earlier of 60 calendar days after IOCA delivers to Anglo American an agreed
Base Case Financial Model together with all necessary supporting documents or
such later date that the parties may agree upon.

·      Anglo American is a leading, global mining company with a portfolio
of competitive, world class operations, including annual production of more
than 60Mt of premium quality iron ore from South Africa and Brazil.

 

Bill Brodie Good, CEO of Alien Metals, commented: "We are really pleased to
have signed this Mandate Letter with a leading, global mining company of Anglo
American's stature."

"The Mandate Letter provides a pathway to negotiate and agree the potential
development debt funding, and a 100% offtake solution. 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. The Board is continuing to assess development plans at Hancock
which may reduce the initial capex requirement outlined in the October 2021
Scoping Study and will advise once this process is complete."

"We thank the Anglo American team for the interest in and support for our
project and we look forward to working with them"

Anglo American is a leading, global mining company with a portfolio of
competitive, world class operations and a broad range of future development
options. For more information about Anglo American refer to:
www.angloamerican.com. (http://www.angloamerican.com.)

Figure 1: Location of Hancock Iron Ore Project, Western Australia

 

The key terms of the Mandate Letter are set out below:

·      IOCA has granted Anglo American an exclusivity period of 60
calendar days after IOCA delivers to Anglo American an agreed Base Case
Financial Model together with all necessary supporting documents or such later
date that the parties may agree upon

·      The parties have agreed to negotiate and, subject to due
diligence satisfactory to Anglo American and Anglo American's internal
approvals, agree legally binding documentation for:

i.      the provision by Anglo American of US$10 million of debt funding
for Hancock repayable over two years; and

ii.     offtake by Anglo American of 100% of iron ore products from
Hancock, which will include vessel prepayments of up to US$5 million for the
first 12 months, for an initial period of 3 years or longer should the minimum
quantity not be delivered.

·      Conditions precedent, customary for transactions of this nature,
including but not limited to:

i.      new equity raised by Alien, and evidence that such amount has
been utilized for Hancock in this case, of US$5 million;

ii.     relevant reports, such as a technical report, environmental
report, insurance report and legal due diligence report;

iii.    documentation for mandatory hedging to be executed and provided by
a third party or Anglo American; and

iv.   permits, approvals, licenses in relation to the mining and
construction and operation of the Project including, confirmed port allocation
and permit to use main road.

·      It is noted that whilst the terms of the Mandate Letter in
particular as regards exclusivity, confidentiality and fees are expressed to
be legally binding the indicative terms of any project funding and offtake are
not and therefore are subject to definitive documentation.

 

Hancock Project Overview:

Hancock hosts a JORC compliant Inferred Mineral Resource of 10.4Mt @ 60.4% Fe
(Announcement: 22 September 2021), and as announced earlier this year, the
project hosts significant potential to find more direct shipping ore (DSO)
grade material on the tenement across ridges F, G & H (announcement: 30
March 2022).

 

Table 1: Mineral Resource Statement, Hancock Iron Ore Project, Alien Metals,
September 2021

 

                  Area             Mass               Average Value

                                   (Million tonnes)
 Classification                    Fe                       SiO(2)  Al(2)O(3)  P     LOI  MnO

 Category
                                   %                        %       %          %     %    %
 Inferred        Sirius Extension  7.8                60.1  4.1     3.72       0.17  5.2  0.05
                 Ridge E           1.5                61.2  4.8     3.38       0.13  3.5  0.02
                 Ridge C           1.1                61.9  4.4     2.93       0.12  3.5  0.03
 Total                             10.4               60.4  4.2     3.6        0.16  4.8  0.04

 

Hosting DSO grade iron ore with low impurities, the Company are confident that
future production from Hancock will be highly sought-after product; as such
the Iron Ore Company of Australia ("IOCA") team is driving development plans
forward on all fronts.

 

Figure 2: Location and results of rock chip sampling program, Hancock Iron Ore
Project, Western Australia, March 2022

 

Being a high-grade DSO iron ore with low impurities, as evidenced in the Bulk
Sample and Metallurgical test work to date (Announcement: 4(th) February
2022), the Company remains confident to be in production in 2023 given the
high level of interest shown by all related parties at this stage in its
development.

 

Table 2: Bulk Sample grab sample assay results, Hancock Project, February 2022

                Fe %    Al2O3%  Mn %   P %    SiO2 %  LOI %
 AM21BLK_C_001  59.63   2.59    0.015  0.08   5.09    3.91
 AM21BLK_C_002  60.5    3.17    0.016  0.081  5.29    3.18
 AM21BLK_C_003  63.03   2.86    0.015  0.078  3.96    2.31
 AM21BLK_C_004  62      3.15    0.016  0.091  4.5     2.89
 AM21BLK_C_005  62.25   2.81    0.015  0.092  4.15    2.84
 AM21BLK_C_006  64.31   1.94    0.01   0.096  3.23    2.18
 AM21BLK_C_007  63.97   2.23    0.011  0.101  3.2     2.29
 AM21BLK_C_008  62.78   2.82    0.013  0.108  3.85    2.66
 AM21BLK_C_009  61.57   3.31    0.012  0.106  4.4     3.12
 AVERAGE        62.23%  2.76%   0.01%  0.09%  4.19%   2.82%

 

 

For further information please visit the Company's website at
www.alienmetals.uk, or contact:

 

 

Alien Metals Limited

Bill Brodie Good, CEO

Tel: +44 20 3811 2144

 

Beaumont Cornish Limited (Nomad)

James Biddle / Roland Cornish

www.beaumontcornish.com

Tel: +44 (0) 207 628 3396

 

Turner Pope Investments (TPI) Limited (Joint Broker)

Andrew Thacker / James Pope

Tel: +44 (0) 20 3657 0050

 

WH Ireland Ltd (Joint Broker)

Harry Ansell / Katy Mitchell

Tel +44 (0) 207 220 1666

 

Yellow Jersey PR (Financial PR)

Sarah Hollins / James Lingfield

alienmetals@yellowjerseypr.com

Tel: +44 (0) 20 3004 9512

 

 

Notes to Editors

 

Alien Metals Ltd is a mining exploration and development company listed on the
AIM market of the London Stock Exchange (LSE: UFO). The Company's focus is on
precious and base metal commodities, with its operations located in proven
mining jurisdictions and it has embarked upon an acquisition-led strategy
headed by a high-quality geological team to build a strong portfolio of
diversified assets. In 2019, the Company acquired 51% of the Brockman and
Hancock Ranges high-grade (Direct Shipping Ore) iron ore projects and executed
an option agreement to increase its interest to 90% in August 2022.

The Company acquired 100% of the Elizabeth Hill Silver Project, which consists
of the Elizabeth Hill Historic Silver Mine Mining Lease and the 115km(2)
exploration tenement around the mine.

In March 2022 the Company acquired 100% of the former joint venture interest
in the Munni Munni Platinum Group Metals and Gold Project in the West Pilbara,
Western Australia, one of Australia's major underexplored PGE and base metals
projects. Munni Munni holds a historic deposit containing 2.2Moz 4E PGM:
Palladium, Platinum, Gold, Rhodium.

The Company also holds two silver projects, San Celso and Los Campos, located
in Zacatecas State, Mexico, Mexico's largest silver producing state, which
produced over 190m Oz of silver in 2018 alone, accounting for 45% of the total
silver production of Mexico for that year. The Company also holds a Copper
Gold project in the same region, Donovan 2.

Glossary

Mineral Resource - A concentration or occurrence of solid or liquid material
of economic interest in or on the Earth's crust in such form, grade (or
quality), and quantity that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade (or quality), continuity
and other geological characteristics of a Mineral Resource are known,
estimated or interpreted from specific geological evidence and knowledge,
including sampling. Mineral Resources are sub-divided, in order of increasing
geological confidence, into Inferred, Indicated and Measured categories.

 

DSO - Direct Shipping Ore

Deleterious Elements - Elements that can be detrimental to the overall
product, such as

Phosphorus.

 

Green Iron Ore - High Grade > 60% Iron Ore needing least processing for
manufacture of steel

Fe - Iron

Al - Aluminium

Ca - Calcium

K - Potassium

Mg - Magnesium

Mn - Manganese

Na - Sodium

P - Phosphorus

S - Sulphur

Si2O3 - Silica

Mt - Million Tonnes

BIF - Banded Iron Formation

 

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