Iron RoadLtd. said April 6 that it has signed a cooperation agreement with aunit of China Railway GroupLtd. and ShandongIron & Steel Group Co. Ltd. to evaluate commercial andtechnical merits to advance the US$4 billion Central Eyre iron ore project, or CEIP, in SouthAustralia, to a final investment decision.
This follows the ASX-listed company's of nonbinding memorandums ofunderstanding with five Chinese steel companies in September 2015 aimed atsecuring long-term off-take agreements.
The strategic cooperation agreement with China RailwayOriental International Construction Corp. provides for a 12-month projectcommercialization program, which will include finalizing bankable constructioncontracts, iron concentrate sales contracts, as well as procuring equity anddebt financing to get the CEIP to a financial close.
China Railway Oriental will also provide consultancyservices equivalent to A$5 million during the commercialization phase, backedby a A$5 million corporate guarantee.
Meanwhile, China Railway Oriental has entered into a 12-monthexclusivity agreement as the prime construction contractor for the project.
In addition, China Railway is anticipating making a directinvestment of up to 15% of the total equity for the project, pending a final apositive final investment decision.
Commenting on the latest development, Iron Road ManagingDirector Andrew Stocks said, "Over the next 12 months, working with [ChinaRailway], we will transition the CEIP from an emerging project candidate toSouth Australia's next large, long life resources development."