Carpentaria Resources (CAP) has signed an agreement with Japan-based trading house Mitsui & Co to develop its Hawsons iron project in Australia.

The Hawsons project is a joint venture owned 68.69% by CAP and 31.31% by Pure Metals.

“This investment confirms Hawsons’ position as the world’s leading undeveloped high quality iron ore project.”

As part of the agreement, Mitsui will invest A$5.4m ($4m) in the project’s bankable feasibility study (BFS) for an option to receive more than 2 million tonnes per annum (Mtpa) of Hawsons Supergrade pellet off-take for 20 years. The company can sell the pellet feed product in Japan.

Mitsui will also contribute $60m to debt funding package to secure the off-take. The funding will be used to establish a new magnetite mine just 60km south-west of the Silver City.

CAP managing director Quentin Hill said: “We are delighted to welcome Mitsui to the project, given its status as one of the largest international investors in Australia’s resources industry, including major iron ore developments.

“This investment confirms Hawsons’ position as the world’s leading undeveloped high quality iron ore project and supports our view that the Hawsons can satisfy the demand from customers in the high quality, high-value and high-growth iron ore markets of direct reduction iron (DRI) and pellet feed.

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“Importantly, the financing reduces the project’s financing risk and enhances its bankability, combining binding investment grade off-take with funding support. This model is highly beneficial to CAP shareholders, as it avoids dilution, addresses key project delivery risks and adds significant value to the project.”

Currently undertaking development studies, the project will produce ultra-low impurity iron concentrate for the premium iron market.

In addition, the company expects to complete the Hawsons BFS within the next 12 to 15 months. It has also submitted a mining lease application with the NSW Government.

Hill added: “We now expect our current discussions with blue-chip off-takers and fund managers to accelerate ahead of securing the remaining BFS funding and develop Hawsons into a major new mine.”