Strategic Resources Inc. announced that it has signed definitive agency agreements with Javelin Global Commodities (SG) PTE Ltd to procure approximately four million tonnes of direct reduction (high purity iron or DR) grade iron ore concentrate and sell up to four million tonnes a year of DR grade iron pellets from Strategic’s planned high purity iron pelletizer facility at Port Saguenay, Québec.
Along with these agreements, Javelin and Strategic have signed an indicative term sheet for Javelin to provide a secured working capital facility up to USD 150 million to support the operations of the plant.
“These Offtake Agreements solidify our business plan to move ahead with the four million tonne high purity iron pellet plant at Port Saguenay, Quebec as phase 1 of the BlackRock Project. Javelin is an outstanding long-term partner to work with given their demonstrated track record in the seaborne iron concentrate and iron pellet markets and provides another major international sponsor for the project. The completion of the Offtake Agreements is a significant milestone for Strategic and puts the company in a position to complete the required next steps over the first three quarters of 2025 as it works towards the start of construction of the high purity iron pellet plant,” commented Sean Cleary, CEO of Strategic Resources Inc.
Other project updates
Javelin will work with Strategic, its feasibility study consultant and Metso to provide iron ore concentrate samples from the selected feed sources for testing. This test work will allow Metso to optimize the pellet plant and refine the detailed engineering for the project. It is estimated that the feasibility study and testing will take approximately six months to complete.
Strategic will continue to have discussions with parties globally around their interest in funding or partnering on phase 2 of the project. Phase 2 allows for the production of direct reduced iron or hot briquetted iron, which would ultimately help with the global transition to electric arc furnaces in the steel industry. Phase 2 is permitted and would allow Québec and Canada to capture more of the value in the global steel supply chain, while helping to reduce global carbon dioxide emissions.
Construction of the two-way, multiuser conveyor belt at Port Saguenay is well advanced and on track for completion in 2025. The 1.5 km conveyor system will serve to deliver iron ore concentrate and other materials from the wharf to the industrial park at Port Saguenay. The finished pellets will be transported on the same conveyor system to the wharf for export. The conveyor project, which is being funded by the Federal Government of Canada and Province of Québec is expected to cost approximately CAD 110 million.
The phased approach of building a 4-million tonne pellet plant as phase 1 of the BlackRock Project means that consumption of natural gas will be significantly lower compared to the construction of the entire metallurgical facility planned for phases 2 and 3. Since the volumes have changed significantly, the project no longer meets the profitability requirements established by Énergir’s regulator. Therefore, the existing natural gas distribution contract signed in 2018 between Énergir and Strategic Resources will be terminated. This enables Strategic Resources to benefit from the return of CAD 4.27 million onto its balance sheet from the letter of credit that had been put in place in April 2023. This capital will be used to continue advancing the phase 1 high purity iron pellet plant project. Taking into account the new volumes and the profitability required by Énergir’s regulator, a new natural gas distribution contract will have to be negotiated.
