Strike Resources Sells 28.52% Stake, Secures $7M Credit Facility for Apurimac
Strike Resources has agreed to sell a further 28.52% indirect stake in its Apurimac Iron Ore Project to JE United Ltd for A$5.5 million, while securing a US$5 million credit facility to accelerate project development and iron ore marketing.
- Sale of 28.52% indirect interest in Apurimac Ferrum S.A.C. for A$5.5 million
- JE United’s total stake in Apurimac rises to 48.52%
- US$5 million credit facility provided by JE United to fund project development and price hedging
- Exclusive marketing rights granted to JE United until credit facility repayment
- Transaction avoids shareholder dilution and supports resumption of mining operations
Strategic Stake Sale to Strengthen Apurimac Project
Strike Resources Limited (ASX:SRK) has taken a significant step towards advancing its high-grade Apurimac Iron Ore Project in Peru by agreeing to sell a further 28.52% indirect interest in its Peruvian subsidiary, Apurimac Ferrum S.A.C. (AF), to JE United Ltd (JEL) for A$5.5 million in cash. This transaction increases JEL’s total interest in AF to 48.52%, nearly half ownership of the project.
The deal is structured through the sale of Strike’s entire shareholding in Strike Finance Pty Ltd, which holds the 48.52% stake in AF. The sale proceeds will be used by Strike to fund its share of development costs and provide working capital, underpinning the company’s efforts to resume mining operations at Apurimac.
Credit Facility and Marketing Agreement: Fueling Growth
Beyond the equity sale, JEL will provide a US$5 million (approximately A$7.065 million) credit facility to AF. This facility is designed to support capital expenditure for mining operations, stockpile creation, and iron ore price hedging. In exchange, JEL will secure exclusive marketing rights for 100% of the iron ore produced until the credit facility and accrued interest are fully repaid.
This arrangement aligns the interests of both parties, with JEL positioned as a strategic partner contributing not only capital but also marketing expertise. The credit facility has a term of up to two years from completion, subject to conditions precedent expected to be satisfied by March 16, 2027.
Advancing Project Development Amid Market Realities
Strike’s Executive Chairman, Farooq Khan, emphasised the strategic value of the transaction, noting that partnering with a well-capitalised iron ore trader like JEL is preferable to raising capital through shareholder dilution. The company is currently conducting detailed fieldwork, including drone magnetometry and ground sampling, to identify high-grade iron ore zones suitable for direct shipping ore production.
Resumption of mining operations remains contingent on permitting, community agreements, and prevailing iron ore prices. The injection of funds from the stake sale and credit facility is expected to accelerate these preparatory activities and position the project for a timely restart.
Governance and Shareholder Dynamics
Post-completion, a shareholders’ agreement will govern the relationship between Strike and JEL within AF, with Strike retaining management control through a management committee. Strategic decisions will require a special majority, ensuring both parties have a say in the project’s direction.
Importantly, the transaction does not require shareholder approval under ASX listing rules, allowing for a streamlined completion process. JEL’s principal, Mr Zhoufeng (Jeff) Zhang, brings a track record in iron ore trading and prior dealings with Strike, adding confidence to the partnership.
Looking Ahead
This deal marks a pivotal moment for Strike Resources as it balances capital needs with strategic partnerships to unlock value from its Peruvian iron ore asset. The combination of equity injection, credit facility, and marketing collaboration sets a foundation for potential production ramp-up, subject to market conditions and regulatory approvals.
Bottom Line?
Strike’s partnership with JE United could be the catalyst that propels Apurimac back into production, but execution risks and market volatility remain key watchpoints.
Questions in the middle?
- Will the conditions precedent be met smoothly by the March 2027 deadline?
- How will iron ore price fluctuations impact the timing and scale of Apurimac’s production restart?
- What are the detailed terms of the marketing agreement and how might they affect Strike’s future revenue streams?
