Meantime, the changed manufacturing environment in China has allowed NSL to negotiate with Chinese equipment manufacturers and potentially significantly improve cost and payment terms. When complete, the negotiations have potential to significantly improve the payment terms, associated cash flows and cost positions of the phase two wet beneficiation plant.
The crushing and screening area of NSL’s dry processing facilities at Kurnool in Andhra Pradesh.
The outcome of these negotiations may mean there is no requirement to fully draw down and place into escrow $1.1 million. Therefore, to ensure costs are kept to a minimum with the phase two wet beneficiation plant project progressing, the company has drawn down and received a further A$300,000 of its A$5 million conventional secured loan announced in August 2015.
The company has successfully negotiated offtake agreements for phase two’s high grade iron ore product with the US$9 billion Indian global conglomerate, JSW Steel, also that country’s leading private sector steel producer, and with BMM Ispat, a leading pellet, power and steel producer.
NSL is the only foreign company to own and operate in India’s massive iron ore market. It has an established dry processing plant operation for iron ore product at Kurnool which is serviced by two of its local mines nearby, Kuja and Mangal. These mines will also provide feedstock for the wet beneficiation plant.
Earlier this year NSL executed a Memorandum of Understanding with the Government of Andhra Pradesh to support the iron ore growth strategy within the state. The MoU is overarching to the previous MoU NSL executed in 2015 with the AP Mineral Development Corporation and covers the mining, beneficiation and pelletisation of low grade iron ores in the state.
The MoU would position NSL to produce in excess of 8 million tonnes per annum of iron ore in the state. In addition, it includes the construction and operation of a centralised pellet plant. The MoU will also realise the generation of 1800 jobs directly associated with the company, and an additional 1000 supporting jobs.
The government will facilitate provision of necessary assistance for NSL which includes prompt land acquisition, adequate infrastructure development and attractive incentives.