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Gunson Resources’ D-Day is fast approaching.

The company expects to hear around the middle of next month from Korean steel giant POSCO over a cornerstone investment in Gunson’s proposed Coburn mineral sands project, 250km north of Geraldton.

The decision was initially due in April but was postponed by POSCO, unnerving investors in the WA junior. However, Gunson remains upbeat about a favourable decision next month, pointing to an increasing flow of requests from POSCO for more information about Coburn.

Under a non-binding term sheet signed in November, POSCO would take up at least 40 per cent of Coburn, funding its equity share of the estimated $180 million development but also paying Gunson an earn-in sum at well above the junior’s current share price.

The tepid market for minerals stocks has also snared Gunson over the past few months, its shares more than halving from 25¢ in March to 10.5¢, capitalising the company at $23 million. The stock is now in limbo, with the next major movement effectively tied to POSCO’s decision.

Coburn, on the south-east edge of the Shark Bay World Heritage Area, is ready to go. It is fully permitted, a 43km mine access road is being laid and DuPont has already agreed to take the project’s first five years of ilmenite production.

Off-take talks for Coburn’s big earner, zircon, and its high-grade titanium — a mix of rutile and leuxocene — are well advanced and discussions continue over tapping equity and debt markets for Gunson’s share of development costs.

The company has a fall-back position in the event POSCO falls through. It is talking to two other potential project partners, one a foreign group and the other Australian-based.

And it has used POSCO’s delay to good effect, commissioning its engineers Sedgman to review the project numbers and the timetable with a view to squeezing savings from both.

Updated financial forecasts from Gunson’s definitive feasibility study 2½ years ago give Coburn a net present value of $224 million with an internal rate of return of 28 per cent before tax and financing.

sean.smith@wanews.com.au