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MOU with Xinhai could see NSL’s annual iron ore production capacity increase

MOU with Xinhai could see NSL’s annual iron ore production capacity increase

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In a possible company making development for NSL Consolidated (ASX: NSL), management has negotiated a strategic cooperation agreement for the provision of wet beneficiation plant Engineering, Procurement and Construction (EPC) services.

A Memorandum of Understanding (MOU) has been agreed upon with high profile Chinese global EPC provider, Shandong Xinhai Mining Technology and Equipment Inc (Xinhai), outlining the way forward for a strategic cooperation strategy, potentially increasing current concentrate capacity by 200,000 tonnes with the prospect of building two separate 1 million tonne concentrate plants to be commissioned in 2018 and 2019.

By way of background, Shandong Xinhai Mining Technology & Equipment Inc, is a Beijing listed company which provides “Turnkey Solutions” for mineral processing plants; including design and research, machine manufacturing, equipment procurement, management services, mine operation, mine materials procurement & management, as well as industry resources integration.

Xinhai has 500 mining EPC projects, 70 methods of ore mining technologies and experience, as well as 20 patents.

The company has previously exported equipment to India, and is now looking to further its exposure in the growing Indian economy through the provision of EPC services, viewing an Australian company operating in India such as NSL as an ideal opportunity.

It should be noted though that this MoU is an early stage agreement and investors should seek professional financial advice for further information if considering this stock for their portfolio.

Xinhai positioned to provide financial backing for new plants

The fact that Xinhai has a strong history with Chinese import/export banks in terms of providing funding for EPC projects throughout its global footprint could be important for a smaller company such as NSL when it comes to financing the development of new plants. On this note management is working with Xinhai to secure financing for future beneficiation plants up to a concentrate production target of 2.5 million tonnes per annum.

Xinhai will immediately commence comprehensive testing from samples already in China to finalise the process flow and equipment requirements to produce a routine operating concentrate grade ranging between 63-65% Fe, targeting 65% Fe.

Xinhai engineers will be on site in India in the coming weeks to review existing operations. The results of the Xinhai site visit and sample testing will then form the framework for the parties to make a decision regarding the aforementioned expansion scenario based on mutually acceptable commercial terms.