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Sheffield’s Wednesday

JV deal gets green light

oreign Investment Review Board deal means Thunderbird will now be fully
F(FIRB) approval for its JV proposal has funded.
paved the way for Sheffield Resources “When we set out on this process 18
Ltd to finally take its Thunderbird mineral months ago, we had a $143 million equity
sands project into construction by the end gap, including everything,” McFadzean
of the year. said. “We always thought a JV deal at 40- Bruce McFadzean
It has been a long development path for 50% for that $143 million would be a good
Sheffield at Thunderbird – 60km west of outcome so to pull it off is a great result for Yansteel are looking for 40 years of feed-
Derby on the Dampier Peninsula, Western shareholders.” stock for their newly built chloride slag
Australia. However, the arrival of Chinese The next step will be to renew the debt plant.
steel producer Yansteel as a 50/50 JV financing component of the project. Shef- “They have the same values around
partner has provided the bridge over the field had previously received offers from people, environment and native title as
$143 million equity funding gap that has Taurus Funds Management and the North- well, so it is a good alignment between the
led to several false starts on the project. ern Australian Infrastructure Fund but with companies.”
FIRB approved the Yansteel JV on the BFS being redrawn, that process will Sheffield’s share price has been on
December 15, paving the way for the have to begin again. a steady incline since Yansteel’s arrival
two companies to complete the deal on “We are now fully funded on the equi- but McFadzean believes there is more to
Wednesday, January 6. The agreement ty side and can restart the debt process come.
will see Yansteel pay $130.1 million for a based on the new flowsheet,” McFadzean “It has been a good run from 6c to 45c
50% stake in Thunderbird, one of the larg- said. “Taurus and NAIF are pretty keen to and I think as we go through the risk hur-
est undeveloped zircon-rich projects in the be involved and the due diligence is al- dles this year we will see another leap in
world. ready largely done because the flowsheet value,” he confidently predicted.
The JV partners are now completing a has only a few changes. Fuelling that confidence is the shifting
final updated BFS with debt financing deci- “We have to do a new agreement with nature of supply/demand fundamentals.
sions set to follow. Taurus because the original funds are “People are still grappling with the boom
Sheffield managing director Bruce Mc- closed but they recently opened a new in front of us and not just in iron ore,” Mc-
Fadzean said completion of the JV was a $US1.2 billion fund and they want to do it Fadzean said. “There has been a complete
huge step for the company and the project. in that. lack of investment in commodities outside
“From when we went to market with the “We will inevitably get approached by iron ore and there’s no development pipe-
BFS update in July 2019 it has taken us 18 other groups as well because it is a bit dif- line. Mineral sands is no different. There
months to finalise. Yansteel came to us in ferent finding debt when you’ve got your are big operations like Jacinth-Ambrosia
April 2020 so it has taken nine months for funding in place. It is much easier than the and Richard’s Bay coming to the end of
that process,” he told Paydirt. other way around.” their life and there is nothing to replace
FIRB has come in for criticism from McFadzean expects debt financing to them.
some circles within the resources sector be finalised by mid-2021, allowing con- “It has crept up on the world without any-
after rejecting several Chinese-backed struction on Thunderbird to start before one really realising.”
takeover bids in the last two years. Mc- the end of the year. In contrast, McFadzean said, Yansteel
Fadzean said while several analysts cast While Yansteel will provide input, Mc- had already identified in mineral sands an
doubt over Sheffield’s ability to gain ap- Fadzean said the Chinese steelmaker was opportunity to diversify away from steel.
proval, the process was a clear and trans- happy for the Australian mining company “They saw that widening opportunity in
parent one. to take the lead on project development. the pigments industry but to be effective in
“There has been a lot of scepticism “Yansteel have shown they are not inter- that space they needed a long-term sup-
about FIRB and we were doing it in the ested in running operations at all,” he said. plier because chloride slag plants are so
middle of the diplomatic tensions over the “It is a pure 50/50 JV in that they know we technical,” he said. “They need reliable
Australian soldier cartoon but we always are better at running it. They’ll add value supply, that is why so many of them are
had a lot of support from State and Fed- in the roasting side of the plant given their vertically integrated.”
eral governments,” he said. “Ultimately, it furnace skills in steel but largely we will just The change in fortunes is also likely to
is a benign project, in the right area to get use the local labour and contractor mar- place Sheffield further up what is a very
people jobs. There wasn’t an anti-China ket.” short watchlist of mineral sands develop-
sentiment from FIRB, instead they were The open relationship suits Sheffield. ment companies.
setting up to stop anyone taking advan- “They are very pragmatic,” McFadzean “I’m sure when we deliver cashflow of
tage of distressed companies in the middle said. “They know the value of the project $60-70 million a year – a number which
of COVID. Yansteel were also very good and are there for the long term. We always can double in Stage 2 – we will be a lot
to work with through the process as well.” wanted a strategic partner rather than a fi- more attractive to other groups,” Mc-
Sheffield had already pocketed $12.3 nancial one. A financial partner will always Fadzean said.
million (at a 130% premium) from an equity be looking for when they can get out and – Dominic Piper
investment by Yansteel last year. The JV make their money. As a strategic partner,

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