Emerging Western Australian resources player Aquila Resources has announced the $5 million purchase of South African diamond giant De Beers' iron ore tenements in the Pilbara region of Western Australia.
Aquila and its partner AMCI Holdings will make the acquisition through their 50-50 joint venture company, Australian Premium Iron, will be solely entitled to the iron ore rights, while De Beers will retain all diamond rights.
In addition Aquila, in its own right outside the joint venture, will be solely entitled to the rights of all other minerals - other than iron ore and diamonds.
Australian Premium Iron will pay De Beers $2.5 million up-front, a further $2.5 million in 12 months and royalties on iron ore sales.
Aquila will pay De Beers a net smelter return on rights to minerals others than iron ore and diamonds.
Explaining the structure of the joint venture, Aquila executive chairman Tony Poli said that the joint venture had been formed for the express purpose of exploring iron ore reserves, leaving Aquila free to pursue other minerals.
"The focus over the coming 12 months is the delineation of resources and we have a team of exploration geologists' active in the western Pilbara," he told WA Business News.
"We are focusing on the western Pilbara because of the potential of the tenements and also the close proximity to the coast, which should present capital cost savings when we come to production."
He said that production was likely to be at least three years away.
The tenement areas cover in-excess of 4,500 square kilometers of the Hamersley Basin, with potential channel iron deposits and bedded iron deposits identified.
The acquisition takes the Australian Premium Iron joint venture's tenement portfolio to more than 10, 000 square kilometers, casting it into the top tier of Pilbara explorers with the likes of Rio Tinto, BHP Billiton and Fortescue Metals.
The transaction also gives the joint venture partners land holdings significant enough in size and potential to achieve the resource tonnage it needs to pursue project development.
The joint venture plans to begin mapping and sampling on the tenement in the first quarter of 2006 and drilling will be conducted once priority targets have been identified.
