Strategic Resources (TSXV: SR) is reporting a net present value (8%) of US$957 million for its merchant iron pelletizer project in Quebec following the completion of a feasibility study.
The project, which is to be based at the Federal Port of Saguenay in Quebec, aims to process iron concentrate into direct reduction grade pellet feed for the green steel industry, with a focus on the growing global electric arc furnace steel production market. The proposed project contains a four million tonne per annum capacity.
Initial CAPEX estimated at US$470 million, with the facility anticipated to take 25 months to construct following a final investment decision.
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Once up and running, the operation is expected to produce annual run rate EBITDA of US$173 million per year, utilizing a DR pellet premium of $70 per tonne. Total costs on a per tonne basis are estimated at $16.31.
“Market fundamentals are extremely positive and the direct reduction grade pellet market premiums have been strong over the last number of years. Management and our large shareholders believe this approach delivers higher returns with less capital. The Port Saguenay location offers Strategic a significant advantage versus other pelletizing operations in North America, given its access to natural gas and ability to produce greener iron products,” commented Sean Cleary, CEO of Strategic Resoures.
With the pre-feasibility study now complete, the company is exploring methods of funding development. Project development planning is expected to move forward, with the company considering undertaking process testwork, iron concentrate supply sourcing, and engineering of facilities among other items.
Strategic Resources last traded at $0.73 on the TSX.
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