Ironveld PLC announced that its 74%-owned subsidiary, Lapon Mining, has signed a binding Mining Operations Agreement with Daemaneng Minerals.
Under the five-year agreement, Daemaneng will take full responsibility for all mining operations at the Lapon site, including both capital and operational expenditure. The company is expected to invest around ZAR 500 million (approximately £21.6 million) to fund these activities.
Daemaneng will recover its verified costs from the proceeds of mined material sales, meaning Ironveld will not incur any operating or capital expenditure related to mining operations.
As part of the deal, Daemaneng is contractually required to supply all ore needed for Ironveld’s joint venture DMS plant and will also oversee all offtake agreements for Run-of-Mine material.
Key Highlights
· Ironveld to Incur No Operating or Capital Expenditure:
The Agreement transfers all mining-related operating and capital expenditure to Daemaneng, enabling Ironveld to maintain full exposure to production upside while eliminating direct cost risk and enhancing capital efficiency.
· Three-Year Term and Five-Year Exclusivity:
The Agreement provides for an initial three-year operational term, with Daemaneng expected to fund approximately ZAR 500 million (equivalent to GBP 21.6 million) in total capital and operational expenditure over the five-year period. This investment commitment is based on Daemaneng’s projected average monthly mining cost of approximately ZAR 8.3 million and is recoverable solely through realised sales of mined material.
The Contractor has been granted exclusive operating rights for five years, conditional upon maintaining full compliance with all agreed investment, production, and performance obligations. All ore supply and marketing activities will be conducted on a transparent, open-book basis, ensuring complete accountability, governance oversight, and alignment of interests between the parties.
· Guaranteed Ore Supply to the JV DMS Plant:
Daemaneng is contractually obligated to supply all ore required by Ironveld’s JV DMS plant, irrespective of volume or demand levels with no upper limit on supply volumes. The Operator must meet all ore requirements necessary to sustain continuous production, ensuring a fully reliable and scalable supply chain to support Ironveld’s downstream processing operations and future production growth.
· New and Additional Revenue Stream:
The partnership establishes an additional and strategically valuable income channel through the commercialisation of Run-of-Mine (“ROM”) material, complementing Ironveld’s DMS-grade magnetite production. Under the terms of the Agreement, Daemaneng is contractually obligated to secure and manage all offtake agreements for the ROM material, ensuring continuous market access and sustainable revenue generation from the Lapon operations.
· Commencement of Operations and Proven Track Record:
Mining operations under Daemaneng will commence shortly, with Daemaneng now fully responsible for achieving all production volumes and quality standards in line with market requirements, contractual obligations, and agreed performance parameters. Having successfully mined material from Lapon in 2018, Daemaneng brings proven operational familiarity with the deposit and its infrastructure, positioning the project for immediate mobilisation, efficient execution, and scalable growth.
Commenting on the Agreement, Kris Andersson, CEO of Ironveld PLC, said:
“This agreement marks a defining moment in Ironveld’s transformation and the first tangible step in pivoting the Company towards delivering a Company focused on revenue generation, risk mitigation, and the realisation of the significant inherent value within our assets.
“The partnership with Daemaneng establishes a performance-based framework that is mutually beneficial and commercially aligned. Its structure ensures that mining costs are minimised to maximise profitability, Daemaneng’s upside is driven entirely by operating efficiently, mining cost-effectively, and marketing material at the most competitive prices.
“By engaging an established and operationally experienced partner, we are unlocking immediate production at Lapon without further capital outlay. The agreement removes the majority of mining-related expenditure from our balance sheet while introducing a new revenue stream through ROM sales, enabling Ironveld to benefit directly from production upside without operational exposure or financial risk.
“Daemaneng’s familiarity with the Lapon site, combined with their investment commitment and established offtake channels, gives us confidence that operations will ramp up rapidly and profitably. With no opex or capex commitments in mining, Ironveld is now a leaner, significantly de-risked business, well positioned for sustainable growth and long-term shareholder value creation.”
