Drilling at Hawsons Iron's Hawsons iron ore project in New South Wales, Australia. The project was significantly derisked when the company's structure changed, according to executive chairman Bryan Granzien. Source: Hawsons Iron

The exit of a major partner involved in multiple attempts to take control of Hawsons Iron Ltd. cleared the path to secure part of the estimated US$1.4 billion it will need to finance the Hawsons iron ore mine in New South Wales, Australia, and help meet increasing green steel demand.

Hawsons signed a A$200 million equity financing put option agreement on Dec. 22 with U.S.-based LDA Capital Ltd., with the ability to access a further A$50.1 million where LDA exercises 71.5 million unlisted share options. The junior can draw down up to A$200 million by issuing put options to LDA over four years.

The pricing of the associated options package and LDA's involvement reflects the project's commercial potential and strategic value within the emerging green steel supply chain, Hawsons Executive Chairman Bryan Granzien said Dec. 22.

Hawsons' project produces the "Supergrade" iron ore concentrate preferred by steelmakers needing to cut emissions as it requires less energy use, Granzien said in an interview. The company is also considering renewables on the project along with electric vehicles, so it may end up as a zero-emissions mine in the future that financiers prefer, Granzien said.

Granzien attributed the financing deal to the board's recent restructure that removed Pure Metals Pty. Ltd.'s involvement in the company. Pure Metals had tried to remove members of Hawsons' board four times in the past eight years, according to Granzien.

Aside from the 2017 prefeasibility study for a 10-million-tonne-per-year project, the Hawsons project, in which Pure Metals acquired 40% in 2013, had been "going nowhere" as it could not raise the necessary funds because "people were aware of the instability of the board," Granzien said.

Clear path ahead for Hawsons

Large diameter core sample from Hawsons Iron's Hawsons iron ore project in New South Wales, Australia. Samples such as these will be used for pilot-scale process test work as part of a bankable feasibility study. Source: Hawsons Iron

Before changing its name to Hawsons Iron in August, Carpentaria Resources' shareholders endured a "frustrating and confusing time," then-managing director Quentin Hill said in a Dec. 17, 2020, statement.

In a Dec. 30, 2020, extraordinary general meeting, Hill urged shareholders to vote against a resolution to remove Paul Cholakos as a director, but supported a move to appoint Granzien as a director and to remove non-executive chairman Peter Graham.

Graham resigned Dec. 29, 2020, before Hill did the same on Jan. 29, ushering in Granzien as executive chairman. Cholakos remains as non-executive director, along with Jon Parker, who spent 26 years at Rio Tinto Group, including as general manager of commercial iron ore.

In February 2021, Carpentaria discovered that Pure Metals' principal shareholder, Ample Source International Ltd., or ASI, had been placed into liquidation in January. The liquidation order was placed by creditor Superior Ocean Shipping (Singapore) Pte. Ltd., a member of Chinese iron and steel company Shougang Group Co. Ltd., according to Carpentaria at the time.

Linda Lau, who was a Carpentaria director at the time, was also a director of ASI.

Pure Metals and direct associates ended up with about 28.5% of Carpentaria after the extraordinary general meeting, which was subsequently placed into the hands of Australian institutional funds and other investors, Granzien said. In May, Carpentaria also acquired the 24.15% that Pure Metals still owned of the project, increasing Carpentaria's stake to about 94%.

With a "clear path" ahead after these changes, investors were willing to back the new board and management, Granzien said, hence the A$35.6 million underwritten placement and entitlement offer to fund the bankable feasibility study due by the end of 2022.

Hawsons is also considering a 20 Mt/y project, which will mean more capex and less operating expenditure, but Granzien believes funding will be achieved due to the compelling business supporting the raise. Modeling done on the record level iron ore prices reached in May suggests the project would be valued at over A$10 billion, with a payback period of less than a year, Granzien said.