DIVERSIFIED exploration company AusQuest is set to fast-track its iron ore interests in the Pilbara following an agreement with mining giant Rio Tinto aimed at progressing an iron ore development at the Nameless Prospect near Tom Price. The letter of intent proposes that AusQuest would retain a 40 per cent interest in the project with a realistic opportunity of having the Nameless Prospect advanced towards development.The letter of intent includes two distinct phases – an initial work program (mainly drilling) to ascertain the potential of the Nameless Prospect, and a Stage 1 farm-in. Subject to fulfilment of conditions, Rio Tinto would make a $1 million placement in AusQuest comprising five million shares at 20 cents per share (together with an attaching 40 cent option exercisable within 24 months) to fund the initial work program (mainly wide-spaced drilling) with a budget of $250,000. The balance of the funds raised can be used at AusQuest’s discretion. At the completion of this initial work program, Rio Tinto must either elect to commence earning an interest in the Nameless Prospect (by progressing to the Stage 1 farm-in phase) or withdraw with no project equity.Under the letter of intent, AusQuest would retain the right to participate in the project at a 40 per cent level and can also elect to sell down or dilute its equity to a minimum of 20 per cent, at which time it must either contribute to ongoing funding for the project or convert its equity to a 1.25 per cent Gross Revenue Royalty. The tenement encompassing the Nameless Prospect was secured by AusQuest earlier this year, adding to its existing portfolio of iron- and nickel-prospective tenements in the Tom Price-Paraburdoo region, where it controls up to 50 kilometres of drainage with the potential to contain pisolitic iron mineralisation.
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