Mr. Joe Phillips reports

MACARTHUR MINERALS SIGNS 10 YEAR IRON ORE OFF-TAKE AGREEMENT FOR THE LAKE GILES IRON PROJECT IN AUSTRALIA WITH GLENCORE INTERNATIONAL A.G.

Macarthur Minerals Ltd. has entered into a binding life-of-mine offtake agreement with Glencore International AG for sale of iron ore to be produced from the Lake Giles iron project at Lake Giles in the Yilgarn region of Western Australia from the commencement of commercial production.

Cameron McCall, executive chairman of Macarthur Minerals, commented: "I am extremely excited to see Glencore's commitment to purchase Macarthur's production over the long term. Securing this approximately $4-billion (U.S.) purchase arrangement ensures consistent long-term revenue to the company. Seeing a commitment of this size validates our resource and project and puts Macarthur in a position to maximize value to our shareholders. Macarthur's management is pursuing debt financing discussion with European banks and international financial institutions. Achieving this key milestone is the beginning for Macarthur to transition into a large-scale global resource production company. A project of this size will provide long-term Western Australian job creation for a generation, especially in the local region of the proposed iron ore mines and for the port work force in Esperance."

Transaction highlights

• Glencore secures life of mine of the project with commercial terms for approximately four million tonnes per annum average for the first 10 years, with the option to extend for a following 10 years for all tonnes of future Lake Giles iron ore production.
• Glencore agrees to release up to 70 per cent of its offtake volume where Macarthur secures project financing from a strategic industry investor, subject to it securing offtake of the product produced.
• This agreement with Glencore positions Macarthur to go forward to complete its project financing.
• The agreement is currently valued at approximately $4-billion (U.S.) in revenue over the first 10-year term ensuring Macarthur long-term revenue and consistent sales per year.
• Terms and conditions have been competitively negotiated reflecting strong forward demand.

High-grade iron ore prices

Metallurgical test work on the Lake Giles's Moonshine magnetite project indicates that an export product of high-margin over 65 per cent iron can be achieved. Current market price for 65-per-cent-Fe product is quoted at $98 (U.S.)/tonne ($140 (Australian) per tonne) (1). The value of the initial 10-year Glencore offtake at the current market price for Moonshine iron ore would be about $4-billion (U.S.).

About the Lake Giles iron project

On Dec. 13, 2018, Macarthur announced that its Lake Giles iron project is a significant Australian iron ore project adjacent to highly developed infrastructure suitable for iron ore exports. There is considerable spare port and rail capacity that can be utilized by the project, with the Port of Esperance having total iron ore export capacity of 11.5 million tonnes. The capex for a combined Moonshine magnetite and Ularring hematite operation is now estimated to be $335-million (U.S.). Magnetite operating expenditure costs are estimated to be $55 (Australian)/tonne free on board (FOB) and opex costs of $42 (Australian)/tonne FOB for hematite.

Macarthur owns 100 per cent of the Moonshine magnetite project, with an inferred and indicated mineral resource estimate consisting of 1,316 million tonnes at 30.1 per cent iron (Fe). Initial metallurgical test work from core at Moonshine indicated that a very high-grade iron ore product ranging from 68.5 per cent to 69.1 per cent Fe can be achieved as an export quality target.

The inferred mineral resource estimate for the Moonshine magnetite project was initially prepared by CSA Global Pty. Ltd. (National Instrument 43-101 technical report filed Dec. 17, 2009, titled "NI43-101 Technical Report on Lake Giles Iron Ore Project: Western Australia") and was updated by Snowden Mining Industry Consultants (NI 43-101 technical report filed March 25, 2011, titled "Macarthur Minerals Limited: Moonshine and Moonshine North Prospects, Lake Giles Iron Project, Western Australia, NI43-101 Technical Report -- Preliminary Assessment").

Macarthur also owns the Ularring hematite project, with a mineral resource estimate consisting of indicated 54.46 million tonnes at 47.2 per cent Fe and inferred 25.99 Mt at 45.4 per cent Fe, previously announced on Aug. 16, 2012 (NI 43-101 technical report filed Oct. 1, 2012, titled "NI 43-101 Report, Macarthur Minerals Limited, Pre-Feasibility Study, Ularring Hematite Project, Western Australia"). The prefeasibility study focused on utilizing all probable mineral reserve of 42.95 Mt at 47 per cent Fe hematite, producing a 60.1-per-cent-Fe sinter fines product.

About Macarthur Minerals Ltd.

Macarthur Minerals is an iron ore development, gold and lithium exploration company that is focused on bringing to production its Western Australia iron ore projects. The iron ore projects are Ularring hematite (approved for development) and the one-plus-billion-tonne Moonshine magnetite. Macarthur Minerals has prominent (about 1,130-square-kilometre tenement area) gold, lithium, nickel, cobalt exploration interests in Pilbara region of Western Australia. In addition, Macarthur Minerals has lithium brine claims in the emerging Railroad Valley region in Nevada, United States.

(1) Custeel iron ore price index.

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