Cazaly Resources has announced the sale of its Parker Range iron ore project to a South East Asian diversified investment group for $100 million plus an estimated $80 million in royalties.
Under the agreement, the investment group will pay an initial $40 million within six months, and a further $55 million would be paid either when first ore is exported or 24 months have passed from when a formal sales agreement is signed.
A royalty of $2.50 per tonne is also payable on all ore produced, capped at a maximum of 10 per cent of gross profits.
Shares in the Perth-based company, which did not reveal the buyer's identity, were up 20 per cent in early trade.
However, the stock eventually closed up three cents, or 8.6 per cent, at 38 cents.
Cazaly did not reveal the buyer’s identity.
But Cazaly said it would retain exposure to potential new discoveries and resources at Parker Range by managing ongoing exploration activities for the Asian group.
Each party will contribute half of the exploration costs.
The deal meant a well-funded party would aggressively pursue the development and construction of a mine based on the Mount Caudan resource at Parker Range, while Cazaly would focus on expanding the resources within the greater project area.
"This agreement unlocks and realises the value we've created in the Parker Range project for Cazaly shareholders, while allowing Cazaly to retain a share of the exploration upside," co-managing director Nathan McMahon said in a statement.
"We are highly confident the Parker Range project will continue to grow in size and scale, and we are delighted to be partnering development of the project with a major international group."
