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Ironbark Zinc Partnership With China's NFC A Path To Citronen Project Development

Ironbark Zinc (ASX: IBG) continues to progress its Citronen Base Metal Project in Greenland with the formal provision of the Feasibility Study to partner China Nonferrous Metal Industry's Foreign Engineering and Construction (NYSEMKT:NFC).

This is in accordance with the non-binding memorandum of understanding, under which the two companies will jointly establish the development program for delivery of the project.

Citronen is one of the world's largest undeveloped zinc projects with a growing Resource currently pegged at more than 11 billion pounds of zinc and lead.

The MoU is a framework agreement under which NFC has undertaken to provide the following:

- Engineering, procurement and construction ("EPC") on a fixed price and turnkey basis;
- NFC to facilitate funding of the project development costs from major banks in China for 70% of the EPC contract cost on a turn-key basis (subject to standard terms and acceptability of the banks);
- NFC is provided with an option to purchase up to 20% of the Citronen project directly on an mutually agreed valuation basis; and
- NFC entering into an offtake agreement for the concentrate products of the Project or a portion thereof.

"We are delighted that the Citronen project is continuing to progress towards development in the current tough funding environment. Ironbark's partnership with NFC provides a pathway to funding and development of Citronen that minimises shareholder dilution," Ironbark managing director Jonathan Downes said.


Citronen is one of the world's largest undeveloped zinc projects and is being evaluated to mine at a rate of 3.3 million tonnes per annum.

This will produce between 140,000 and 220,000 tonnes per annum of zinc and around 10,000tpa of lead over a mine life of at least 14 years for delivery around the world with an estimated life of mine cash flow exceeding US$5.65 Billion.

The project also benefits from low sovereign risk and its location adjacent to deep, protected water on the doorstep of Europe and North America.

It has open-pit fresh sulphide potential with very low strip ratios to supplement higher grade underground mined mineralisation that itself requires simple room and pillar mining.

Highlighting the potential of Ironbark's projects, Glencore has already provided Ironbark with a US$50 million convertible note funding facility to acquire assets and for working capital.

The facility places Ironbark in a very strong position to build a leading international base metals company at a time when Ironbark believes considerable external growth opportunities exist - with the added bonus of attractive offtake and marketing arrangements with Glencore already agreed.

China Nonferrous Metal Industry's Foreign Engineering and Construction

NFC is listed on the Shenzen Stock Exchange and is based in Beijing.

It constructs and sells a wide array of mining and equipment and is rated as one of the world's top engineering firms by the US publication Engineering News Record.

NFC also operates a wide array of mines and processing plants around the world including zinc mines and a zinc smelter.

These include the Chambishi Copper Mine in Zambia and associated 150,000-ton copper smelter, Tumurtin-Ovoo Zinc Mine in Mongolia and Thai-China Lead-Antimony Alloy Plant in Thailand.

Other major projects include Kazakhstan 250,000-ton aluminium smelter, NICICO 80,000-ton copper smelter in Iran, a 100,000 lead smelter for Vedanta in India.


Ironbark Zinc's provision of the Feasibility Study to NFC is another step towards progressing the Citronen project.

The Chinese group will be in a position to begin delivering the results from their work later in 2013, as has been previously flagged.

Notably, Citronen offers a long mine life with mineralisation open in almost every direction and is one of the few world class deposits that is wholly-owned by a junior company.

Production is also scheduled at a time of many planned zinc mine closures, a forecast shortage of zinc supply and anticipated high zinc prices.

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