SmallCaps: Genmin signs iron ore royalty, financing and offtake deal with Anglo American

In what is a switch of marketing policy, West Africa iron ore explorer and developer Genmin (ASX: GEN) has linked up with global giant Anglo American to cover financing development and marketing of its output in Gabon.

After listing in March 2021, Genmin set out to target the China market and was working with China’s Central South University, where its lump and fines products were being assessed.

In late 2021 the executive team was broadened to handle in-house marketing, adding sales expertise enabling direct engagement with Chinese steelmakers.

However, Genmin has now granted Anglo American a 1% royalty and an exclusive right to negotiate and agree on terms for up to US$75 million ($110.7mn) in financing.

This will cover 100% of the output of the flagship Baniaka iron ore project, and the company will receive an immediate US$10 million from Anglo American.

Deal will kick in later this quarter

The royalty is payable on the first 75 million tonnes of iron ore sold from Baniaka and Genmin has a buy-back right that can be exercised at any time.

The exclusivity rights offered to Anglo America commences when Genmin delivers its Baniaka preliminary feasibility study, now due by the end of the September quarter. The exclusivity deal is for 120 days.

Genmin chief executive officer Joe Ariti said the US$10 million payment by Anglo American will not dilute existing shareholders.

Anglo American ‘ideal’ partner

“We regard Anglo American as an ideal potential partner for achieving our goal of pioneering iron ore production in Gabon in a sustainable way, given Anglo American’s heritage in Africa,” he noted.

Mr Ariti added that Anglo American is committed to sustainable operations and activities as an iron ore producer and partner.

Genmin has a 100% interest in three projects in Gabon covering about 5,270 sq km.

The Baniaka project is located in southeast Gabon near the provincial city of Franceville.

Last month the company reported it had completed reclassifying the resource to indicated status at the Bandjougoy prospect of its Detrital Iron Deposit (DID) in Gabon following an infill drilling program.

In addition, the resource has been increased by 1.5 million tonnes to 19.9Mt.

DID is part of the company’s overall Baniaka project.

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