Ironbark Zinc Ltd (ASX:IBG) looked back on the year that was at its latest annual general meeting (AGM).

The materials stock recapped its highlights from the year, which included a robust bankable feasibility study (BFS), a key opportunity with an export-import (EXIM) bank and greater leverage to the zinc price.

Currently, Ironbark has its eye trained on the Citronen Zinc Deposit in northern Greenland, where it one day hopes to erect a 3.3 million tonnes-per-annum mining operation.

At the end of the September quarter, the company had A$1.6 million in cash on hand to advance development work over the Citronen asset.

Investment highlights from the year that was.

Bankable feasibility study

In July this year, Ironbark released Citronen’s BFS, setting out a series of key metrics for the northern zinc deposit.

Modelling a 3.3 million tonnes-per-annum operation, the study outlines how a zinc hub at Citronen could deliver US$1.46 billion in post-tax free cash flow.

The project bears a post-tax net present value of US$363 million, a 15.2% internal rate of return and requires US$654 million in capital expenditure.

Ironbark believes Citronen can produce 2.5 million tonnes of zinc over its 20-year mine life, averaging 130,000 tonnes every year.

It has already established two key offtake agreements for the zinc deposit — both with major shareholders.

Trafigura Ltd is in line to offtake 35% of Citronen’s life of mine production, while mining giant Glencore PLC (LSE:GLEN) is out for another 35% (comprising 10 years of zinc production and life-of-mine lead output).

Glencore and Trafigura represent the world’s largest and sixth-largest zinc metal producers, respectively.

Key findings from the BFS.

At the time, IBG managing director Michael Jardine said: “The 2021 BFS update is the culmination of an intensive reassessment of the development plan for the Citronen Project.

“It is a pragmatic and grounded view of the asset that highlights the potential for Citronen to be developed into a significant producer of zinc metal over multiple pricing cycles.

“This study worked through several challenges that required creative thinking, disciplined decision making in terms of trade-offs and a willingness to reconsider some long-standing assumptions about the project.

“For these reasons, I am much more confident today than I was 12 months ago about the depth of understanding we have and the solutions that are proposed.”

Michael Jardine.

“There are few known large, near-surface SEDEX zinc ore bodies that still await development, and even fewer located in low sovereign risk countries such as Greenland.

“Once built, Citronen will be a multi-decade mine underwritten by the strength of the company’s existing offtake agreements.”

Citronen’s resources and reserves

Ironbark has established a 48.8 million tonnes ore reserve for Citronen, founded on an 84.7 million tonnes mineral resource estimate (MRE).

Specifically, the MRE is reported to contain 4.7% zinc and 0.5% lead. Full details are outlined below:

IBG has also identified an exploration target, in addition to the known mineral resource, of 40 million tonnes to 90 million tonnes at 5.0% to 7.1% zinc and lead combined.

The exploration target is based on a review of project drilling, rock chip samples and the limited geophysical data available.

A 3D geological model of the project was used to help identify prospective areas.

Plan view of the Citronen Deposit, showing current zinc mineral resource outline, drill hole and rock chip sample locations and exploration target areas.

EXIM bank opportunity

Thanks to the BFS’ completion, Ironbark is looking at finance options to get Citronen off the ground.

Recently, the company lodged its project finance loan application with US-based EXIM Bank, the official Export Credit Agency (ECA) of the United States Government.

Fast forward to today, and it’s waiting on a key letter from the bank — expected sometime next month.

Essentially, the correspondence will let Ironbark know whether the institution wants to proceed with a financing offer and sets out some of the early terms and conditions.

The preliminary project letter will also involve an indicative term sheet that draws up all the commercial factors and some guidance for phase two of the process.

In August, Jardine commented: “This is a long-awaited and potentially transformative step in the life of Ironbark and the Citronen Project, given these are undoubtedly the most advanced financing discussions the company has undertaken to date.

“EXIM is uniquely placed to potentially cornerstone the development of Citronen for a range of reasons – economic, commercial and political – and I am extremely excited about the coming months.

“It’s clear that future prosperity will demand new zinc mines and Citronen is one of the few large projects ready to go today, with even fewer located in jurisdictions able to meet the most stringent standards of today’s ESG focused investors.”

Zinc market outlook

Ironbark continues to advance the Citronen property as the zinc market gains ground.

Fastmarkets analyst James Moore and reporter Ana de Liz commented in October that the outlook for zinc demand appears upbeat.

“While central banks globally are in the process of dialling back their pandemic stimulus packages, we expect policy to generally remain accommodating.

“Vast fiscal spending on infrastructure will feed through to the zinc market. And while zinc demand often correlates with traditional infrastructure expansions in road and rail, zinc will also play a strategic role in new-energy infrastructure.

“We also expect some pent-up demand from the automotive sector next year, after the semiconductor shortage forced automakers to defer and delay production this year.

“Persistent forward selling above $3,000 per tonne has been acting as a barrier to higher prices, but we believe prices will gradually strengthen, particularly if investors start to anticipate end-of-life mine closures scheduled for 2022-2023, which will tighten refined metal availability in the coming years.”

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