Funding Delays and Regulatory Hurdles Test Magnetite Mines’ Razorback Progress

Strategic Funding and Partnership Progress

Magnetite Mines Limited (ASX: MGT) has reported a robust second quarter marked by critical advancements in funding and strategic partnerships for its flagship Razorback Iron Ore Project. The company secured a flexible $7 million funding facility through unsecured convertible notes from US-based C/M Capital Partners, with an initial tranche of $1.2 million already received. This capital injection is designed to support ongoing project development activities, including the imminent submission of the Mining Lease Proposal (MLP) to the South Australian Government.

Negotiations with JFE Shoji Australia, a wholly owned subsidiary of JFE Holdings, remain on track despite a slight delay, with Definitive Agreements now targeted for execution in the second quarter of 2025. These agreements will underpin the Definitive Feasibility Study (DFS) funding and establish long-term joint venture arrangements, reflecting Magnetite Mines’ commitment to securing a strong strategic partner for the multi-decade project.

Regulatory Milestones and Technical Advances

The company has completed the documentation for the Mining Lease Proposal, with submission planned by mid-March 2025, aligning with the new funding timeline. This milestone follows the South Australian Government’s gazettal of bespoke Terms of Reference, streamlining environmental and regulatory assessments. Concurrently, Magnetite Mines has commenced metallurgical testwork using saline water from Spencer Gulf, aiming to reduce processing costs and environmental impact by avoiding large-scale desalination.

Technical progress also includes comprehensive due diligence support for potential joint venture and offtake partners, refinement of DFS scope and budgets, and completion of mining and tailings storage studies essential for the MLP. These efforts underscore the company’s focus on de-risking and optimizing the project ahead of final investment decisions.

Corporate Restructuring and Cost Management

In response to challenging macroeconomic conditions, Magnetite Mines has implemented significant overhead cost reductions and streamlined its board to three directors: Paul White (Non-Executive Chair), Tim Dobson (Managing Director), and Simon Wandke (Non-Executive Director). These measures are expected to yield annual savings exceeding $600,000, enhancing the company’s financial resilience as it advances project development.

Green Iron SA Consortium and Market Positioning

Magnetite Mines continues to play a leading role in the Green Iron SA consortium, alongside Aurizon, Flinders Ports, and GHD. The consortium’s Expression of Interest submission to the South Australian Government aims to establish Port Pirie as a green iron production and export hub, leveraging the Braemar Iron Region’s vast magnetite reserves and the state’s renewable energy capacity. Engagement with government officials and trade missions to Japan and Korea highlight the strategic importance of this initiative in meeting growing demand for low-carbon steelmaking inputs.

Market dynamics further support the project’s potential, with increasing global focus on decarbonisation driving demand for direct reduction (DR) grade magnetite concentrates. The recent high-profile transaction involving the Kami magnetite project in Canada underscores the premium valuation and strategic interest in green iron ore assets.