Mount Gibson Iron has approved Shougang Concord International Enterprises Company and SCIT Trading’s new terms as guarantor and buyer under the existing Koolan Island offtake agreement with Newton Resources and its subsidiary Ace Profit Investment.
Shougang Concord is a substantial stakeholder in Shougang Fushan Resources, which in turn holds an indirect 14.5% stake in Mount Gibson.
Shougang Concord and SCIT hold a longstanding life-of-mine offtake agreement to buy 80% available iron ore production from Koolan Island, as part of the existing Koolan Island offtake agreement.
Shougang Concord has confirmed that its majority stakeholder Shougang Group, a Chinese state-owned entity, has undertaken a strategic review of its iron ore business interests.
Shougang Group is restructuring those interests through Newton, in which it holds a 27.5% stake.
Hong-Kong based explorer and miner Newton Resources is primarily engaged in the supply and trading of iron ores, coals and stone products. It aims to expand its iron ore trading business through existing relationships with steel mills on the Chinese mainland.
Newton has earlier purchased iron ore from Mount Gibson’s mid-west operations.
Besides Newton’s guarantee, Ace’s obligations as buyer are supported by a $75m guarantee from VMS Investment Group, a Hong Kong-based private investment firm owning 28.7% stake in Newton.
Novation agreements and guarantee documents have been negotiated and executed.
These arrangements are based on the condition that Newton and Shougang Concord secure shareholder approval if needed and a legal opinion confirms valid execution of the documentation.
Based in Australia, Mount Gibson is an independent producer of shipping grade iron ore products, with assets located in the Kimberley and mid-west regions of Western Australia.