Ironveld ‘nearing delivery’ of heavily delayed smelter acquisition - is all still to play for? (IRON)

By James Moore


Ironveld (LSE:IRON) reminded the market that it still exists today with an update reiterating that it is ‘nearing the delivery’ of its planned purchase of a smelter that could see the early delivery of $1m a month operating profit. The business said it is ‘presently focused’ on concluding the financing for the acquisition of the 7.5MW smelting facility and associated independent power plant in Middelburg, South Africa from Siyanda Inkwali Smelting Services. After some refurbishment, the smelter would enable the early production of Vanadium, High Purity Iron (HPI), and Titanium at Ironveld’s project located at the Bushveld Complex in Limpopo Province, South Africa.

The project’s current resource contains a whopping 27m tonnes of HPI, and 1.4Bn pounds of Vanadium in situ. Once in production, Ironveld believes the smelter will be able to generate 190.5 tonnes of vanadium in slag grading 36% V and 21,000 tonnes of HPI powder per annum.

In today’s update, the business also reported that its water use licence application for the project is expected to be resolved by the Department of Water Affairs early in Q2 2018. This licence is the only outstanding licence and means Ironveld is now in a position to begin site establishment and civil engineering works in preparation for the commencement of mining activities.

Peter Cox, chief executive of Ironveld, said:

“The company is now nearing the delivery of long-awaited value to its shareholders through the execution of a strategically important acquisition and the commencement of mining activity.”

‘By quantum, our vanadium and HPI resources are world class and the quality of our product validated through the long-term offtake agreements in place. We look forward to updating our shareholders in due course.’

As we have written before, the acquisition of the smelter will be transformational for Ironveld, and investors have been hanging on every detail of its progress over the last two years. Assuming the firm successfully secures the debt-funding package it needs to buy the smelter and that it commences production early this year, the business is on course to generate over $1m a month net operating profit.

That’s a net $12million a year, for at least two years as Ironveld takes advantage of various tax shelters. For a firm that still only has a market cap of £9.6m, this is almost too good to be true. Today’s update may not provide much new information but it shows the company is still putting the work in and addresses its historical lack of communication with investors – something that we have previously pointed out.

Despite its many delays, all is still to play for at Ironveld – the firm just needs to such a final £8.2m tranche of project funding to complete the purchase of the smelter. In its full-year results, released in December, the company said it remains in advanced discussions with a number of funding providers, but little has been said since and shares have remained flat this year.

However, in an interview around the time of the results, Cox reassured us that good progress is still being made. If today’s announcement foreshadows some significant news, then Ironveld’s 2.2p share price could look extremely attractive.

Author: Daniel Flynn


The author of this piece does not own shares in the company mentioned


Author: James Moore

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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