Bethesda, July 8, 2013 (GLOBE NEWSWIRE) -- India Globalization Capital, Inc. (NYSE MKT: IGC) announced the signing of an iron ore sale and purchase agreement with Mon Resources International LLC on July 3 rd, 2013. Mon Resources supplies iron ore produced in Mongolia. The contract encompasses an aggregate shipment of up to 126,000 metric tons of iron ore, and is effective through December 31, 2013, and can be extended via mutual agreement.
IGC will purchase an aggregate of 126,000 metric tons of 54% Fe content ore delivered to the IGC hub at the border of Mongolia and China. IGC's subsidiary in China will then beneficiate this ore to 66% Fe content, which is then sold to the steel mills. The shipments are expected to commence in August with projected aggregate revenue between $10 million and $12 million, based on current pricing, and favorable profit margins.
Ram Mukunda, CEO of IGC, remarked, "This order stems from the successful 300 MT test shipment and the establishment of a shipping hub at the border of Mongolia and China, both of which were announced in the past months. This ore serves as the raw material for the beneficiation plants that can process it into 66% plus ore that is then sold to steel mills in China. As the ore already has 54% Ferrous (Fe) content, processing it to a higher grade creates greater efficiencies and a lower cost basis and as a result higher margins. Even based on today's relatively low pricing environment for iron ore, we expect this transaction to result in meaningful incremental profitability. As pricing firms up later in the year as many anticipate, we expect to generate potentially significant profitability."Mukunda added, "We are excited about our relationship in Mongolia. This establishes our network in Mongolia, where we are one of the first U.S. companies, and where we see considerable 'first-mover' acquisition opportunities. Our plan is to consolidate iron ore mines and beneficiation plants in the Inner Mongolia and Mongolian region, emerging as a leading provider of iron ore to the steel industry. The iron ore mining industry is highly fragmented in that area and as the first U.S. public company in this extremely mineral rich area, we have a large and exciting entrepreneurial opportunity to create significant value for our shareholders."