A $250 million multi-commodity and multi-user deep-water port proposed at Cape Hardy on the Eyre Peninsula has taken a crucial step forward this month, with Macquarie Capital entering into a Joint Development Agreement (JDA) with Iron Road Ltd and Eyre Peninsula Co-operative Bulk Handling (EPCBH) in relation to the Cape Hardy Stage 1 port project.
The JDA provides the framework to advance development and financing plans for the proposed facility. The joint development parties will now progress the establishment of a project vehicle and formally commence the first phase of a comprehensive Development Plan, targeting Financial Close of the project by Q3 2021, subject to the satisfaction or waiver of certain conditions.
The JDA includes defined steps for securing of equity and debt capital for the port development and includes the usual rights of termination, such as material adverse change provisions. Macquarie will also provide financial advisory services to the project.
According to Iron Road, as a key priority, the developers will continue their ongoing engagement with growers to progress supply arrangements that will facilitate efficient financing and refine the design and functional requirements of the project to best meet users’ needs. These discussions are part of a well-established and continuing grower, customer, and community consultation process.
Discussions with other potential third-party users who have already expressed interest in accessing an import/export facility at Cape Hardy will continue in parallel.
To date, there have been several hundred individual and group consultations by Iron Road and EPCBH with various stakeholders, including landowners, local and regional communities, local community groups, Barngarla traditional owners, project specific committees, focus groups, industry and business as well as Local, State and Federal government agencies and representatives.
Other major steps leading up to Financial Close will include finalisation of the Development Plan Consent in addition to concluding detailed marine and landside facility designs and subsequent construction tenders.
Iron Road Chief Executive Officer Larry Ingle said the company has been working closely with key stakeholders on the Cape Hardy port development since 2012 as part of the wider Central Eyre Iron Project.
“We are pleased that Macquarie Capital shares our vision of the near-term benefits and future opportunities this vital infrastructure unlocks for Eyre Peninsula communities. A major partnership milestone with Macquarie Capital and EPCBH represents a key step forward in de-risking this important project for South Australia,” he said.
In December 2019, the Federal Government provided a $25 million grant to help make the Cape Hardy Stage I port development a reality.
Regional Development Australia Eyre Peninsula (RDAEP) and Eyre Peninsula Local Government Association (EPLGA) have also had strong advocacy for the project.
In parallel with the JDA, Iron Road and Macquarie have entered into a second agreement that, subject to satisfaction of the conditions precedent to the JDA and other procedural conditions, will see the issuance of a total 40 million Iron Road warrants with vesting contingent on Financial Close and commercial operations being achieved.
An initial 25 million tranche is exercisable from Financial Close with the second 15 million tranche exercisable from the Commercial Operations Date (COD).
All warrants provide the holder with a right, but not obligation, to acquire ordinary shares in Iron Road and have an exercise price of $0.075 – equivalent to Iron Road’s last rights issue offer price – and will expire 24 months post COD (Warrants).
The issue of Warrants will be made under Iron Road’s 15 per cent placement capacity under Listing Rule 7.1 and is subject to ASX approval of the Warrant terms.
Iron Road has also agreed to grant Macquarie the right to participate in up to 20 per cent of any share placement conducted by Iron Road for a period up to 12 months commencing in the lead up to Financial Close.
As part of the Agreement, Macquarie is granted certain co-development rights, consultation rights and formal rights of first refusal with Iron Road in respect of the future development of the Cape Hardy port precinct, beyond the Project.
These rights do not prohibit any shareholder in Iron Road or Iron Road itself from approaching or entering into an arrangement with a third party regarding the sale, acquisition, or issuance of ordinary shares in Iron Road.
AMEC welcomes the news
Warren Pearce, Chief Executive Officer of the Association of Mining and Exploration Company (AMEC) said a deep-water multi-commodity port outside of Adelaide was listed as the number one infrastructure priority in South Australia for AMEC members.
“[The] announcement brings Iron Road’s project a step closer to development, bringing the associated jobs, growth, royalties and opportunities closer to realisation as well.”
“The proposed infrastructure will be open to others, including grain exporters and other miners in the region,” Mr Pearce commented.
“This is a transformative announcement for South Australia. The development of a deep-water facility outside of Adelaide will have positive impacts for many other projects.”
