Magnetite Mines Limited (MGT) has provided an update regarding the farm-in offer from Braemar Mining Developments Pty Limited (BMD), a company founded by RFC Ambrian Group Limited, regarding the Razorback Iron Project.
Following further negotiations with BMD, MGT has agreed in principle on the material terms of the farm-in offer and executed a non-binding term sheet with BMD.
The farm-in arrangement would be staged and based on BMD funding a bulk ore sorting trial and then a pre-feasibility study (PFS) over the Razorback Project to earn a 49.99 per cent interest.
MGT has advised that the subsequent Bankable Feasibility Study (BFS) stage can be co-funded at the Company’s election. This means that MGT will retain a majority interest in the Razorback Iron Project with a final interest of at least 50.01 per cent if the company chooses to exercise its co-funding rights through the proposed stages.
Under the terms of the offer, BMD is proposed to farm-in to the Razorback Iron Project, (comprising EL6353, E6126 and EL6126) by spending up to A$20 million and through completing a number of activities using its own internal and external resources.
The Farm-in is proposed to be undertaken in three stages, with BMD to fund:
- Stage 1 – Commencement of PFS and NextOre trial
BMD can earn up to 30 per cent interest if BMD spends $5 million on the project, and completes the NextOre trial, including commercial testing of the technology pursuant to the Exclusivity Agreement announcement in October 2019.
- Stage 2 – Completion of PFS
BMD can earn a further 19.99 per cent interest if BMD spends a further $5 million on the project. In Stage 2 with the intent to complete a PFS. The company would have the right to fund up to 50 per cent of the Stage 2 PFS work (subject to BMD’s agreement); and
- Stage 3 – Completion of BFS
The BFS can either be co-funded, in which base MGT retains a 50.01 per cent interest, or BMD can earn up to an additional 20.01 per cent interest if BMD sole funds a further $10 million by funding a BFS on the project.
Furthermore, the farm-in offer is conditional on BMD completing a capital raising of $5 million within four months of the parties executing the non-binding term sheet and BMD entering into a formal Farm-in agreement, for which detailed terms and conditions are being negotiated between the parties.
About the Razorback Iron Project
The Razorback Iron Project is a magnetite iron ore deposit in the western portion of the Braemar, approximately 250 kilometres northeast of Adelaide in South Australia, capable of producing high-grade iron ore concentrate product suited for the use in steel production.
The project consists of three main ore bodies, with Razorback Ridge being the primary deposit followed by Iron Peak and Ironback Hill. Together these deposits constitute 3.9 billion tonnes of JORC 2012 Inferred to Indicated resources.
Since 2009, Magnetite Mines Limited has invested AUD $35 million in the project by carrying out over 52,000 metres of drilling, completing a positive pre-feasibility study, and subsequent optimisation of that study.