GEN extends offtake MoU’s for development stage iron ore asset

Our Investment Genmin (ASX: GEN) has just extended the 3 Letter of Intent’s for project financing & offtake for its iron ore project in Gabon.

GEN owns 100% of the Baniaka iron ore deposit in Gabon.

The project has an 758.7Mt resource at 36.7% and is at the development stage.

(including a 48.2% high grade component that GEN is looking to develop first, source).

A prior PFS (subject to an update soon) has been done for a 5Mtpa startup operation returning:

(source)

At the moment, GEN has already secured:

• Long term power supply agreement
• Long term rail agreement
• Long term port agreement
• Offtake MOU’s with 4 Chinese steel manufacturers (3 extended today)
• Mining Convention and Permitting signed

Today GEN extended 3 of its existing 4 offtake MoU’s.

The MoU’s with China Minmetals Corporation, Jianlong Group, and Hunan-Valin Iron & Steel Group are now extended for an additional 18 months, until June 30, 2027.

GEN also mentioned in today’s announcement that the intention is to have these progress to binding MOU’s later in 2026, where it hopes to make its final investment decision this year:

(source)

This comes on the back of a recent trip to China by GEN’s management, where we saw a couple of photos posted to LinkedIn by the company doing visits:

(source)

Here is a list of all four MoU’s - the ones that were extended are highlighted:

(source)

Last year, GEN raised funds which will see it through to the final investment decision and then in December signed a Letter of Intent for project financing and co-development of the project.

(Source)

The LOI is from Sino-Hunan International Engineering and Development Co., Ltd (SHICO), with a proposal to fund 60% of total project funding requirement, which would leave 40% for GEN.

Based on the 2022 PFS the CAPEX requirement for GEN’s project is around US$200M total (so that would mean GEN would need to fund ~US$80M).

(assuming the LOI became binding)

So we wait to see what comes of all of this as GEN aims to have a clear path toward mining around mid year.

What’s next for GEN?

Updated Pre Feasibility Study (PFS)

GEN confirmed during the raise that the updated PFS would be prioritised. (source)

Prior to this, GEN put out an update where a partner had rerun some numbers and found out that the expected CAPEX for the project is now forecast to cost less than the prior 2022 feasibility study and was looking into other areas as a result, we covered this update here.

So we await to see the updated numbers and the outcome of this.

Project financing update (US$200M CAPEX financing)

We want to see GEN show a pathway to getting its project financed and into construction.

Late last year GEN signed a LOI with Sino-Hunan International Engineering and Development Co., Ltd (SHICO), so we await to see if this turns into something more binding (which was mentioned in the announcement they are working towards this soon).

Milestones

🔲 Confirm funding strategy

🔲 Secure debt financing

🔲 Secure equity financing

🔲 Secure binding offtake agreements

🔲 Secure prepayments for offtake or other strategic capital partners.

Convert offtake MoU’s into binding agreements

In the near term we are looking for GEN to make progress across its offtake MoUs and today there were extensions with these and the intention to have them binding by around mid year. (source)

With 4 non-binding MoUs for offtake already secured, we think GEN will be looking to make these offtakes binding and in doing so, firm up the financing picture.

We expect there would be some competitive tension around GEN’s premium product - and things could move quickly once any of these 4 MoUs are converted into a binding agreement.

Milestones

🔄 Binding offtake #1

🔄 Binding offtake #2