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Ironbark Zinc MOU with LNS for equity position plus construction & mining contract for Citronen project, Greenland

Ironbark Zinc Ltd has announced that a non-binding Memorandum of Understanding (MOU) has been executed between the company and Norwegian group Leonhard…

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This article was originally published by International Mining

Ironbark Zinc Ltd has announced that a non-binding Memorandum of Understanding (MOU) has been executed between the company and Norwegian group Leonhard Nilsen & Sønner (LNS) regarding a possible equity investment in, and contractual arrangement for services to, the company’s flagship Citronen project in northern Greenland which will see 2.5 Mt) of zinc metal produced over the life of mine averaging ~130,000 t/y.

Citronen will be a 3.3 Mt/y combined open pit and underground operation treating an average grade of 4.7% Zn and 0.5% Pb, over an initial 20 year mine life. Ironbark is supported by its major shareholders Nyrstar – a major global zinc smelter group, and Glencore International AG – the world’s largest zinc trader, major zinc miner and smelter.

The MOU contemplates LNS taking, or earning, an equity position in the project in return for preferred contractor status on three key elements of the project: civil construction contractor during the construction phase; mining contractor during the operations phase; and logistics management for both phases.

IBG Managing Director Michael Jardine: “This is beginning of what I anticipate will be a fundamental, long term and valuable relationship between Ironbark and LNS A/S. With their background in Arctic and Antarctic construction and mining, there are few – if any – groups anywhere in the world better qualified to help execute the vision we have for the Citronen Project. The challenges of undertaking an Arctic project for Ironbark would be significantly reduced with the project support and participation of LNS. This MOU potentially marries together the world class Citronen deposit with the LNS team’s extensive experience in building and operating high latitude projects. I am personally very invested in making this MOU a success and look forward to working closely with LNS in taking Citronen from concept to reality.”

LNS President Frode Nilsen: “The Citronen Project is unique, and this MOU opens for LNS to contribute with our knowledge and competency in the further development of the Citronen Project. The Arctic is our home turf, and our experience fits very well with what Ironbark is requiring. I’m looking forward to continuing our cooperation and good work into the next phase of the project.”

In addition to the three specific elements identified above, the MOU also contains a provision allowing broader commercial arrangements to be contemplated between the parties for their mutual benefit. The MOU will be executed in two phases:

  • Phase 1 – confirmatory due diligence by LNS on the Citronen Project, including provisional agreement on terms to proceed to Phase 2; and
  • Phase 2 – subject to Phase 1 successfully concluding, agreement of a Term Sheet relating to an equity investment by LNS A/S in the Citronen project

The MOU as currently agreed between Ironbark and LNS is non-binding in nature and has an initial term of 12 months from signing, subject to any further date being agreed by the parties.

LNS is a wholly owned family business based in Risøyhamn, Norway. The group currently owns and operates mining businesses in both Greenland and Norway and specialises in high latitude civil, construction, mining and logistics businesses. Notable successes in LNS’ portfolio include the construction of the Global Seed Vault at Svalbard, groundwork and infrastructure for the Norwegian Troll research station in Antarctica, mining operations and civil works from the late 1990s up until today at Svalbard, and a range of large and complex mining, civil construction and tunnel projects.

Mining projects currently executed by LNS include a contract with Elkem Tana AS to excavate quartzite for the ferrosilicon industry around the world. The open-pit and surface mine in Austertana is one of several northern Norwegian mines where LNS is the operating contractor. The project involves drilling, blasting and transporting 1.2 Mt of quartzite per year.

LNS has since 2007 developed six new underground levels, plus access tunnels, for Rana Gruber’s iron ore production drilling. Approximately 8,000 m are developed per level. The transportation drive is drilled 20 m from the iron ore. LNS is also the main contract for Rana Gruber’s surface mines – the operation consists of three open-pit mines with different ore qualities requiring blending for delivery to the mineral processing plant. Kvannevann Øst is the main mine, and there are operations at two satellite mines located further west on Ørtfjellet. In 2018, the open-pit mine switched to a new pattern of operations, with a new and larger fleet of machinery. This included four 100-t tipper trucks, two 100-t main loaders and several smaller articulated dumper trucks, cleaning machines, drilling rigs and various road maintenance equipment.

In 2020, Nussir ASA also named LNS as development & mining contractor for its planned all electric underground copper mine in Finnmark. The contract between Nussir and LNS is for ten years, but with the possibility of extension. The contract value was estimated at some NOK4 billion or almost $450 million and includes development and equipping of a 130,000 m+ tunnel. Mine development is set to begin in 2023 with mine production commencing 2024.

Alongside its mining and contracting arms, LNS has a large and established logistics business based out of Longyearbyen, Svalbard. Given the proximity of Svalbard to Citronen and its likely role as a forward base, as well as the fact that LNS has historically provided logistics services to Ironbark, the scope of this MOU potentially de-risks a broad swathe of operational elements relating to project execution.

The post Ironbark Zinc MOU with LNS for equity position plus construction & mining contract for Citronen project, Greenland appeared first on International Mining.


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