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Freehill Mining (ASX:FHS) has conceded it’s not a magnetite mine announcement – but still expects “considerable” repeat revenue from a new 4 year contract.
Into 2028, Freehill Mining will supply Chile’s largest cement company with rock material after months of early-stage talks to underpin the smooth operation of a four year US$271M project to build a new hospital in La Serena.
Purchase orders will roll in each month; the first order is valued at A$205,000 including VAT. Being a government-funded infrastructure project, the company expects to generate repeat revenue without much turbulence.
Of course, given that solid cash injection – the company has had to stall its plans to build an iron ore mine, which is what it would rather be doing.
“The confirmation and scale of this order from Melón means Freehill has to prioritise processing of construction materials over magnetite processing and sale in the short term as this will result in greater revenue being realised,” Freehill Mining wrote on Wednesday.
Still, with iron ore prices volatile and the company already looking at a pretty solid revenue opportunity, management were rational in their comments.
“While we had hoped to recommence magnetite mining this month, it was expected that Melón would be our foundation customer and their short term supply needs means magnetite is not their immediate prioritym” Freehill chair Ben Jarvis said.
“[But we’re] now regarded as a trusted supplier of material to underpin construction of large-scale infrastructure projects such as hospitals and ports.
“We have worked collaboratively with Melón over many months to arrive at the right material for this project with supply to continue over a number of years. As such, this first purchase order reflects only a fraction of the potential total value.”
“The current order book supports this,” it was quietly added.
FHS last traded at 0.5cps.
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