India Globalization Capital Executes Iron Ore Sale and Purchase Agreement with $10 Million to $12 Million Projected Aggregate Revenue
Bethesda, July 8, 2013 (GLOBE NEWSWIRE) -- India Globalization Capital, Inc. (IGC.U) (NYSE MKT: IGC) announced the signing of an iron ore sale and purchase agreement with Mon Resources International LLC on July 3rd, 2013. Mon Resources supplies iron ore produced in Mongolia. The contract encompasses an aggregate shipment of up to 126,000 metric tons of iron ore, and is effective through December 31, 2013, and can be extended via mutual agreement.
IGC will purchase an aggregate of 126,000 metric tons of 54% Fe content ore delivered to the IGC hub at the border of Mongolia and China. IGC's subsidiary in China will then beneficiate this ore to 66% Fe content, which is then sold to the steel mills. The shipments are expected to commence in August with projected aggregate revenue between $10 million and $12 million, based on current pricing, and favorable profit margins.
Ram Mukunda, CEO of IGC, remarked, "This order stems from the successful 300 MT test shipment and the establishment of a shipping hub at the border of Mongolia and China, both of which were announced in the past months. This ore serves as the raw material for the beneficiation plants that can process it into 66% plus ore that is then sold to steel mills in China. As the ore already has 54% Ferrous (Fe) content, processing it to a higher grade creates greater efficiencies and a lower cost basis and as a result higher margins. Even based on today's relatively low pricing environment for iron ore, we expect this transaction to result in meaningful incremental profitability. As pricing firms up later in the year as many anticipate, we expect to generate potentially significant profitability."
Mukunda added, "We are excited about our relationship in Mongolia. This establishes our network in Mongolia, where we are one of the first U.S. companies, and where we see considerable 'first-mover' acquisition opportunities. Our plan is to consolidate iron ore mines and beneficiation plants in the Inner Mongolia and Mongolian region, emerging as a leading provider of iron ore to the steel industry. The iron ore mining industry is highly fragmented in that area and as the first U.S. public company in this extremely mineral rich area, we have a large and exciting entrepreneurial opportunity to create significant value for our shareholders."
Mr. Mukunda cited the results of the recent presidential election in Mongolia as further encouragement for building IGC's portfolio there. The newly elected president's platform is focused on integrating Mongolia into the global economy. He has sought to use Mongolia's vast mineral wealth to bring foreign investment into the country while also ensuring that Mongolians profit from it as well. It was under him that the Mongolian government amended its Foreign Investment Law to encourage private companies such as IGC to invest there. Companies such as IGC no longer need Cabinet or Parliamentary approval before acquiring equity in companies based in Mongolia.
Based in Bethesda, Maryland, India Globalization Capital, Inc. (IGC) is a materials and infrastructure company operating in India and China. We currently supply iron ore to steel companies operating in China. For more information about IGC, please visit IGC's Web site at www.indiaglobalcap.com . For information about Ironman, please visit www.hfironman.net .
Some of the statements contained in this press release that are not historical facts constitute forward-looking statements under the federal securities laws. Forward-looking statements can be identified by the use of the words "may," "will," "should," "could," "expects," "post", "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "proposed," "confident" or "continue" or the negative of those terms. These statements are not a guarantee of future developments and are subject to risks, uncertainties and other factors, some of which are beyond IGC's control and are difficult to predict. Consequently, actual results may differ materially from information contained in the forward-looking statements as a result of future changes or developments in our business, our competitive environment, infrastructure demands, Iron ore availability and governmental, regulatory, political, economic, legal and social conditions in China and India.
The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. Other factors and risks that could cause or contribute to actual results differing materially from such forward-looking statements have been discussed in greater detail in IGC's Schedule 14A, Form 10-K for FYE 2012, Form 10-Q for the quarter ended September 30, 2012 and Form 10-Q for the quarter ended December 31, 2012 filed with the Securities and Exchange Commission on December 9, 2011, July 16, 2012, November 14, 2012, and February 13, 2013 respectively.
CONTACT: Contact: Investors Contact Information Claudia Grimaldi 301-983-0998
Source: India Globalization Capital (IGC) 2013 GlobeNewswire, Inc.