|
Northland Resources S.A. (TSX:NAU - News; OSLO:NAUR - News; FRANKFURT:NBS - News) - "Northland"
or "the Company") is pleased to announce the conclusion of a
long-term off-take agreement with Standard Bank Plc ("Standard
Bank" or the "Bank") for up to 3 million tonnes
of iron ore pellet feed per year from the Kaunisvaara
Iron Ore Project in Northern Sweden.
Standard Bank has a long and successful
history of trading physical commodities globally, and especially in Asia. The
Bank's commodity and emerging market expertise and ability to trade physical
iron ore directly with customers in China via its local trading company,
Standard Resources China (SRC), make it uniquely positioned to leverage
global bulk commodity trade flows. Access to end-use customers through the
bank's strong presence in China is supported by the bank's strategic alliance
with Industrial & Commercial Bank of China (ICBC) - the world's largest
bank which holds a 20% stake in Standard Bank.
In addition to the off-take agreement,
the parties will enter into a marketing and sales agreement to co-ordinate
and co-operate on marketing and sales activities in order to maximize the
value added from customized funding and other arrangements for end-use
customers of both Northland and Standard Bank.
The entire production from Kaunisvaara is now sold on long-term off-take agreements
where Standard Bank has committed to take 60% of the volume and Stemcor and
Tata Steel will each take 20% respectively, as previously announced.
"We are very pleased with the
agreement with Standard Bank. They are bringing great value to our project
with their strong strategic position in Asia and have the potential of introducing
Northland to a customer base that can best benefit from Northland's high
value product. The co-operation on marketing and sales will provide great
flexibility and will create opportunities for sales into other global markets
as and when they develop" says Karl-Axel Waplan,
President and CEO of Northland.
"The transaction with Northland
Resources demonstrates Standard Bank's commitment to supporting the
development of world class projects. Our experience in providing the full
value chain from structured finance right through to physical commodity
sales, coupled with our strong position in Asia were key factors in the two
parties coming together" says Bruce Garner, Managing Director and Global
Head of Commodities.
Update on Financing
The Standard Bank off-take agreement is
subject to financial support and the parties have entered into a letter of
intent for a plant and equipment guarantee facility for up to USD 80 million
and a cost overrun facility for USD 40 million which will cover part of the cost
overrun account that is required by the Senior Lenders.
The first facility is expected to be
available in 2011 to cover part of the vendor's exposure for committing long
lead items to the Kaunisvaara Iron Ore Project, and
the second facility guaranteeing the cost overrun account is expected to be
in place before draw down on the Senior Loan in 2012.
The Company has agreed on a term sheet
for the Senior Loan which will be applied to cover part of the expected
capital expenditures as presented in the Definitive Feasibility Study on the Kaunisvaara Project. The Senior Loan is for up to USD 400
million and a minimum term of 8 years. It is to be arranged by the three lead
banks Societe Generale, WestLB AG and UniCredit and is
subject to inter alia satisfactory due diligence, final credit approvals and
syndication.
Previously, the Company signed a term
sheet with Caterpillar Financial for a mobile equipment lease facility of up
to USD 50 million, and a letter of intent with Stemcor for a credit facility
of USD 50 million in combination with their off-take agreement.
The total capital expenditures and
financing requirements for the Kaunisvaara Iron Ore
Project will depend on a number of factors. As such the Company is
considering additional sources of financing in order to complete the required
financing for the construction of the Kaunisvaara
Iron Ore Project and other projects in the Company's portfolio.
Northland is a development-stage mining
company with a portfolio of iron projects in northern Sweden and Finland.
Northland's Kaunisvaara Project contemplates the
staged development of magnetite iron ore deposits that would provide feed to
a single, multi-line processing facility in Sweden, producing a high-grade,
high-quality magnetite iron concentrate. The results of the Definitive
Feasibility Study on the Kaunisvaara Project were
released September 27, 2010.
Karl-Axel Waplan,
President & CEO
Northland Resources S.A.
Contact:
Karl-Axel Waplan
Northland Resources S.A.
President and CEO
+46 705 104 239
Anders Hvide
Northland Resources S.A.
Executive Chairman |