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Macarthur Minerals signs iron ore off-take agreement with Glencore International

MiningOther Commodities

Macarthur Minerals announced that it has signed a binding life-of-mine off-take agreement with Glencore International for sale of iron ore to be produced from the Lake Giles Iron project, after starting commercial production.


Image: Glencore secures life-of-mine of the project with commercial terms for approximately 4 million tons per annum for the first 10 years. Photo courtesy of xusenru/Pixabay.

On 13December 2018, Macarthur Minerals has made an announcement that its Lake Giles Iron Project at Lake Giles in the Yilgarn region of Western Australia is adjacent to well-developed infrastructure and is suitable for iron ore exports.

Under the agreement, Glencore secures life-of-mine of the project with commercial terms for approximately 4 million tons per annum for the first 10 years, with an with the option to extend for a following 10 years for all tons of future Lake Giles iron ore production.

Macarthur Minerals executive chairman Cameron McCall said: “I am extremely excited to see Glencore’s commitment to purchase Macarthur’s production over the long term. Securing this approximately US$4 billion purchase arrangement ensures consistent long-term revenue to the Company.

“Seeing a commitment of this size validates our resource and project and puts Macarthur in a position to maximize value to our shareholders. Macarthur’s management is pursuing debt financing discussion with European banks and international financial institutions.”

The present agreement with Glencore would help the company in completing the project financing and values approximately $4billion in revenue for the first 10-year term ensuring long term revenue and consistent sales per year for Macarthur.

Macarthur has carried out metallurgical test works on its 100% owned Moonshine magnetite project at Lake Giles, which showed that an export product of high margin +65% Fe can be achieved.

Considering current market price for 65% Fe product quoted at $98/ton, the value of the initial 10-year off-take for Glencore for Moonshine iron ore would be approximately $4bn.

McCall added: “Achieving this key milestone is the beginning for Macarthur to transition into a large scale global resource production company. A project of this size will provide long term Western Australian job creation for a generation, especially in the local region of the proposed iron ore mines and for the port workforce in Esperance.”