Arianne Phosphate, Saguenay, Quebec, a development-stage phosphate mining company advancing the Lac à Paul project in Quebec’s Saguenay-Lac-Saint-Jean region, said on June 4 it has entered into a nonbinding Memorandum of Understanding (MOU) with China Machinery Industry Construction Group Inc. (Sinoconst), a large Chinese state-owned enterprise. The two agree to work towards a final binding agreement relating to the development of Arianne’s Lac à Paul project, which would include full project financing.
On a parallel track, efforts to secure offtake are expected to be undertaken by Sinoconst in support of the financing package discussed under the MOU. Participation in the development of Lac à Paul on the part of Sinoconst is tied to finalized project financing commitments.
“This is a very exciting development for Arianne and the advancement of its Lac à Paul project,” said Arianne CEO Brian Ostroff, Arianne CEO. “Where China used to be self-sufficient in phosphate, many industry analysts now see the country heading for a deficit in phosphate rock concentrate, joining the likes of India, another country of over 1 billion people. Arianne believes that concluding definitive financing agreements would be mutually beneficial; it would allow Arianne the financing necessary to develop its mine and allow China, through Sinoconst, an opportunity to access high-quality phosphate concentrate.
“The intent is now for both parties to reach a fully binding agreement and, as per the MOU, would directly tie Sinoconst’s participation in the project’s development to their ability to provide necessary project financing which, we believe, will be supported by offtake discussions; a structure often seen in Chinese involvement in large mining projects. For Arianne, this is a welcomed addition to discussions we have ongoing with other potential suppliers, offtakers and financial partners and our feeling is that this should accelerate all discussions,” said Ostroff.
Although no assurances can be made as to a final agreement being reached, Arianne said conversations surrounding the MOU have been ongoing for some time, adding that both sides have indicated a strong willingness to progress to a final binding agreement in as quick a time frame as possible.
Arianne noted that Sinoconst, founded in 1953, has been involved in hundreds of projects in 40 separate countries in different sectors including both mining and agriculture, and has in-depth strategic cooperation relationships with many large financial institutions that can assist in the financing of these large developments.
It also noted that Sinoconst, and its subsidiary China Machinery Industry Hainan Co. Ltd., are striving to expand their import and export trading businesses that currently cover machinery, agricultural, and food products and minerals.