ASX-listed Fenix Resources Limited (Fenix or the Company) has executed a farm-in and joint venture terms sheet with Scorpion Minerals Limited (Scorpion) over tenements E20/953 (currently the subject of an option to acquire between Scorpion and Element 25 Limited) and E20/948 (currently 100 per cent-owned by Scorpion) (together Tenements) (Farm-In and Joint Venture Agreement). The Tenements are adjacent to the tenements comprising Fenix’s Iron Ridge Project.
Iron Ridge is located approximately 600 kilometres north-northeast of Perth and approximately 67 kilometres northeast of the township of Cue in the Murchison region of Western Australia.
Material terms of the recent Farm-In and Joint Venture Agreement are as follows:
(a) Scorpion grants to Fenix the right to earn a 70 per cent interest in the Iron Ore Rights, as defined below, in the tenements during the farm-in period of four years (Farm-In Period); and
(b) For the remainder of the Farm-in Period, Scorpion grants to Fenix the sole and exclusive right to carry out exploration for iron ore on the tenements for the purpose of exercising the Iron Ore Rights as required to satisfy the Farm-in Requirements.
During the Farm-in Period and, if Fenix satisfies the Farm-in Requirements during the Farm-in Period, during the continuance of the Joint Venture, Scorpion agrees that it will not exercise the Iron Ore Rights in respect of the tenements
(a) Subject to paragraph (b), to earn a 70 per cent interest in the Iron Ore Project, Fenix must fund all drilling up to 10,000,000 tonnes of Iron Ore JORC-compliant Mineral Resources.
(b) Notwithstanding paragraph (a), if at any time during the Farm-in period, Fenix completes resource definition drilling and a Feasibility study on a minimum 1,000,000 tonne Iron Ore deposit (Development Deposit), Fenix may, by notice in writing to Scorpion:
(i) Elect to treat the Development Deposit as a stand-alone Iron Ore Project (Development Project); and
(ii) Delineate a mining area within the Tenements (covering the Development Deposit and such other areas as are reasonably sufficient for the conduct of the proposed mining operation.
in which event:
(i) Fenix will be deemed to have satisfied the Farm-in Requirements in respect of the Development Project and the Development Area, and to have earned a 70 per cent interest in the Development Project; and
(ii) Scorpion and Fenix will be deemed to have established the Joint Venture in respect of the Development Project.
For the avoidance of doubt, if at any time during the Farm-in Period, Fenix establishes any further Development Area, that Development Area will form part of the same Joint Venture and any and all such Development Areas will form part of the same Joint Venture upon satisfaction of the full Farm- in Requirements under paragraph (a).
(c) Upon satisfaction of the Farm-in Requirements during the Farm-in Period, Fenix will be deemed to have earned a 70 per cent interest in the Iron Ore Project, and Fenix and Scorpion will be deemed to have formed a joint venture in respect of the Iron Ore Rights and the Iron Ore Project in their respective percentage interests from time to time (the Joint Venture).
(d) If Fenix fails to complete the Farm-in Requirements prior to the expiry of the 4-year Farm-in Period, Fenix will be deemed to have surrendered its right to earn an interest in the Iron Ore Project (other than any existing Development Project)
Fenix may withdraw from the Terms Sheet at any time prior to the expiry of the Farm-in Period provided that it has expended not less than $350,000 on exploration expenditure on the Tenements at the time of withdrawal.
In commenting on the news, Fenix’s Managing Director, Rob Brierley, said: “Fenix is excited by the opportunity to increase its landholding and, potentially, its iron ore resource to further benefit from the regional infrastructure, ore transport and port facilities already established for the Iron Ridge Project.”
The full announcement can be found here.
*Above image: The Fenix-Scorpion Location, image courtesy of Fenix Resources Limited.