Carpentaria Resources looks to increase stake in highest-grade iron ore project

Australian miner Carpentaria Resources (ASX:CAP) has launched a share purchase plan as it moves to increase its ownership of the Hawsons Iron Project.

Australian explorer Carpentaria Resources (ASX:CAP) has launched a share purchase plan as it moves to increase its ownership of the Hawsons Iron Project.

The project – a joint venture with Pure Metals – aims to produce ore concentrate with a 70 percent iron content, making it the highest iron content product globally.

Based in Broken Hill, New South Wales, the massive site already has access to critical road, rail, and water infrastructure.

The high iron grade and access to existing infrastructure make the project one of the most viable iron ore projects of this type, according to analysis by energy and resource consultancy Wood Mackenzie.

Despite this, the company’s market capitalisation remains only around $10 million.

The company plans to raise $1.19 million to finance further developments at the site as key global manufacturing hubs look to improve steelmaking efficiency and cut carbon emissions.

The business will also increase its ownership of the project to 94 per cent by converting Pure Metal’s share of the project to Carpentaria equity. The transaction will provide Carpentaria’s counterparties on the project development with greater clarity and certainty.

Shareholders can subscribe at a price of 3.5 cents per share. Carpentaria expects the raise will provide the business with sufficient working capital for the next 18 months.

The move follows cost-cutting initiatives across the miner’s operations, and a board reset which will see Pure Metals owner Linda Lau join the team of directors.

Ms Lau has served as a corporate consultant to major businesses for over three decades, and previously set up Anshan Iron & Steel’s (now Ansteel Group) first Australian corporate vehicle.

Ms Lau has an extensive network of contacts in the Chinese steel industry and chair Peter Graham said her addition to the board will be “hugely beneficial” and align the business’ interest with its Chinese investors.

Mr Graham added the business is now squarely focused on the future, with plans to bring on key partners which will “sit at the table and commit” to the project.

“That’s the steely resolve of the board for the next six months – to get parties involved to go to the next stage,” he said.

“No more languishing, no more drifting.”

Mr Graham said the increased ownership share will simplify negotiations with key partners and expedite a $1.4 billion development planned for the site.

At current high-grade iron ore prices ($US125 per ton), Mr Graham expects the payback period for the proposed development will be only one and a half years.

Ore for a changing market

Carpentaria’s renewed development push comes as manufacturing powerhouses such as Germany and China look to drastically reduce their carbon emissions – including in the steelmaking process.

German authorities have outlined plans to use hydrogen-fuelled blast furnaces instead of the traditional furnaces which rely on coking coal.

This presents an opportunity for high-grade iron ore producers too, according to Mr Graham.

“If you can use 70 per cent iron ore feed instead of 55 per cent, then it’s going to make the whole process a lot more efficient, more efficient processing will mean a further reduction in emissions” he said

China is making similar moves to curb its emissions amid mounting international pressure from major trade partners (including Australia and the US).

Chinese authorities now aim to be carbon-neutral before 2060.

Reach Markets invites you to join a special online investor briefing on Thursday at 11am with Carpentaria Resources Chairman, Peter Graham. Peter will discuss the future of Australia’s iron ore industry and things investors can look for to take advantage.

In the session, Peter will detail:

  • The global steel-making input trends for high-quality ore;
  • The unique viability of the Hawsons Iron project;
  • Unlocking shareholder value after extending Carpentaria Resources’ offtake partnership with Mitsui.

Event: Carpentaria Resources – Live Investor Briefing Date: Thursday 15 October Time: 11 am AEDT Book here


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