Genmin (ASX: GEN), which has a greener iron ore project that it sees as being at the cusp of production, is aiming for $700m worth of ore per year from 2026.

Genmin has a high grade, low cost project that can produce greener iron ore and that is in the late stages of securing financing for 2025 construction – at a very opportune time following the recent strong price spike in iron ore.

Subject to this financing being secured in the next few months, the analysts from Foster Stockbroking put a 61c price target on GEN – more than 7x the last traded price.

Genmin has already signed MoUs with four potential offtake parties, three of which sit among the top 15 global steel producers and one being a top 3 shareholder of Fortescue (ASX: FMG).

The company has some high-profile people on the board such as the former COO of Fortescue, and they are backed by high profile institutional investors including US$750m private equity fund Tembo Capital plus royalty financing from mining giant AngloAmerican.

With iron ore spiking and China focusing on greener ore, it is an interesting time to get across Genmin as a near-term opportunity to capitalise on this trend.

Iron ore made it back to the headlines in past days with its recent spike in prices of over 10% to above US$110/ton – and one ASX-listed explorer could benefit from this development. Genmin (ASX: GEN) which owns the Baniaka greener iron ore project in Gabon, might be at the cusp of value creation as it negotiates a financing deal with large Chinese offtake partners that they think could get them into production by 2026.

We recently recorded a webcast with Genmin (ASX: GEN), a developer targeting $700 million/year of near term greener iron ore production which could put the company at a key value inflection point. Click here to request the recording.

China and the greener iron ore supply deficit

All eyes have been on China’s recent stimulus package for its economy which saw the iron price spike and the Australian mining sector having its best week in 9 years.

This has been helping smaller iron ore stocks as well, but Genmin’s location and the fact that it can produce greener iron ore should be of particular note, with what is going on in China.

China is on a drive to transition to a low carbon economy and has been aggressively hunting high grade, low cost iron ore that is ‘greener’ i.e. produced using renewable energy. They want it to come from Africa to become more independent from the West which supplies the majority of their ore.

To secure future supply, China recently announced a US$ 51 billion financing package for resources and infrastructure deals in Africa – that will all be deployed over the next 3 years.

One advanced developer well positioned to benefit from this is Genmin (ASX: GEN). The company projects that it is less than two years away from producing $700 million of iron ore annually, with the potential to grow to over US$2 billion a year.

The Grand Poubara Hydropower Station next to Genmin’s Baniaka project (source: Genmin)

Click here to request a webcast recording with Genmin (ASX: GEN), targeting $700 million/year of near-term greener iron ore production which could put the company at a key value inflection point. 

One final step away from construction and production

Genmin is at an interesting point right now, with just one piece of the puzzle missing before their move to construction in 2025 and production in 2026.

The company has signed four offtake agreements – three of which are within the top 15 global steel producers, with revenues of over US $100 billion per year. All of these offtake discussions are well advanced, with terms, prices and timelines all being agreed to. The 19Mt total of these four agreements accounts for almost four years of Baniaka’s initial mining capacity.

The reason why Genmin Founder and Director Joe Ariti has been holding back on turning these MoUs into binding contracts is that these offtake partners are also the ideal financiers of the project to build a mine.

Genmin expects to have this process completed during the final quarter of 2024, which they think would represent a watershed moment for the company.

The research analysts from Foster Stockbroking agree, putting a target of 61c on the stock – over 7x the latest share price – subject to executed financing.

The four offtake companies in question are Baowu Resources Co. Ltd, Jianlong Group, Hunan Iron & Steel, and China Minmetals Corporation – with each of them individually possessing the firepower to finance the project’s US$ 200 million capex outlay.

Hunan, for instance, is ranked within the top 15 global crude steel producers with production of 25.6Mt in 2022 and more than 23,000 employees. It was also an early investor and offtake partner in Fortescue Metals Group Ltd (ASX: FMG) and is now its third largest shareholder with an ~8.7% stake, currently valued at around $5 billion.

Joe Ariti, GEN’s Founder and Non-Executive Director, is leading these negotiations and is upbeat about the prospects of signing a deal.

“Obviously, the key focus for now is to get financing. Luckily we have four offtake partners lined up under our Plan A, who could each finance this project individually, given its modest capex. And we also have a Plan B and C in place, so naturally I am very confident that we can get this final milestone done and move to production in 2026”.  Joe Ariti, Founder Genmin

Hear directly from Genmin Executive Director Joe Ariti why he believes Genmin could be producing 5Mt of greener iron ore in mid-2026. Click here to request a recent webcast recording.

A sustainable and straightforward mining plan

The project will be majority powered by a local hydropower plant, which was commissioned just 10 years ago. Genmin signed a long-term hydroelectric power purchase agreement with state owned utility company Société de Patrimoine (SdP) to supply hydroelectric power to Baniaka.

SdP will supply 30MW of renewable power, with the option to increase to 50MW, and is governed under a fixed and variable tariff structure that results in a projected cost of less than US$0.10 per kilowatt hour.

The Grand Poubara Hydropower Station next to Genmin’s Baniaka project (source: Genmin)

The proposed mining operation is relatively simple and well understood, even by iron ore standards. It is based on a conventional, proven truck and shovel open pit mining operation with low-risk wet scrubbing, screening, and a gravity separation ore treatment flow sheet. There is no tailings dam, with a simple filter and dry stack into an engineered valley approach being implemented.

The Trans-Gabon railway, which GEN will be using to transport ore, is a well established transportation network that provides almost direct access from the mine to the port.

The Trans-Gabon Railway which Genmin expects to use (source: Genmin)

Genmin Founder and Director Joe Ariti recently outlined his strategy for high grade, low cost greener iron ore production in collaboration with world class players Tembo Capital and Anglo American. Click here to request a recording.

High-profile board and investors

Importantly Joe Ariti has a strong team and backers around him that he thinks can get the job done.

Joe himself has worked in Africa for decades and previously led ASX-listed African Iron Limited to its sale to South African giant Exxaro Resources for $350 million in 2012.

The board is chaired by Michael Arnett who is also chair of $1.6 billion NRW Holdings and also features Greg Lilleyman, who was Chief Operating Officer at iron ore giant Fortescue until 2021, as well as Salvatore Amico, former General Representative of French mining conglomerate Eramet (PA: ERA) to Gabon. Notably Eramet is majority owner of the entity that owns the Trans-Gabon railway which GEN will be using to transport ore. Mr Amico has directed hundreds of millions of dollars into resources and infrastructure projects in Gabon.

However, probably the most interesting board member, from an investor’s perspective, is John Hodder, representing Tembo Capital as the largest investor.

Tembo Capital, whose third and latest fund raised US$380 million, is a private equity group focusing on natural resources and clean energy metals. Tembo Capital’s ability to choose high quality projects and orchestrate the realisation of value has been well demonstrated over more than a decade, especially on the ASX.

Investors will remember Tembo being behind the restructure of Paladin Energy in 2017, when its market cap was $80 million – which has since grown to $3.5 billion or more recently Spartan Resources (ASX: SPR), where it entered the stock in February 2023 at $0.10/ share, before its run to $1.46/share.

Tembo has been involved in Genmin since 2014 and currently owns 48.2% of the company. It has been supportive including this year. In a big vote of confidence to Genmin’s project and management, Tembo recently agreed to convert $8.25 million of loans to Genmin into equity.

UK mining giant AngloAmerican is another important backer, having invested US$10 million in Baniaka in 2022, in return for a 1% sales royalty from the first 75 million tonnes of ore produced and sold.

Hear directly from Genmin Founder Joe Ariti on why he believes Genmin has enjoyed the support of high profile investors including Tembo Capital. Click here to get a recent webcast recording.

On the cusp of value creation

Genmin’s journey to this point hasn’t been easy, facing challenges such as a government transition in Gabon last year and a declining share price over the past few years.

However, the board sees the project now as being just one milestone away from production within a market that is screaming for greener iron ore supply from places other than Australia.

China’s recent push for green steel and its drive to diversify supply chains by sourcing more from Africa positions the company to capitalise on this development. With demand for sustainable materials rising and Africa emerging as a strategic supplier, the company could be well-placed to seize new opportunities in the market

“We have worked for over 10 years on getting this fantastic project to this point, and we are now in the late stages of negotiating that final piece that gets us ready for construction and production. We have multiple shots on goal to achieve that and the right people on the board and register. I have never been more excited about our aspirations to produce $700m worth of ore per year from 2026”.   Joe Ariti, Director Genmin

We recently recorded a webcast with Genmin (ASX: GEN), targeting $700 million/year of near term greener iron ore production, which could grow to over US$ 2 billion annually. Click here to request a recording.