West Perth-based Emergent Resources will pay up to $6.8 million to De Grey Mining to acquire the remaining 20 per cent interest it does not own in the Beyondie magnetite iron project in the Mid West.
West Perth-based Emergent Resources will pay up to $6.8 million to De Grey Mining to acquire the remaining 20 per cent interest it does not own in the Beyondie magnetite iron project in the Mid West.
The announcement is below:
Key Points
Emergent to acquire 100% ownership of Beyondie Magnetite Iron Project through purchase of De Grey's right to 20% free carried interest in the project
Emergent to pay De Grey an initial payment of $4.5m and deferred payments totaling $2.25m plus interest
Completion of Purchase and Sale agreement dependent on Emergent's shareholders approval for issue of shares and options to China Metallurgical Investment Co Ltd and also Foreign Investment Review Board approval
Emergent Resources Limited (ASX: EMG) (Emergent, the Company) is pleased to advise that it has entered into a Purchase and Sale Agreement with De Grey Mining Limited (ASX: DEG) (De Grey) to acquire 100% ownership of the Beyondie Iron Ore Project in Western Australia's midwest iron ore region.
Under the terms of the Purchase and Sale Agreement Emergent will acquire De Grey's right to a 20% free carried interest in the Beyondie Iron Project, giving Emergent 100% ownership of the project, for an initial payment to De Grey of $4.5 million plus deferred payments totaling $2.25 million (plus interest).
The initial $4.5 million payment to De Grey is due within 30 days of Emergent receiving shareholder approval for the issue of Emergent shares and options to China Metallurgical Investment Co Ltd (CMIC) under Emergent's proposed Development Joint Venture with CMIC for the development of the Beyondie Project, and having CMIC's investment approved by the Australian Foreign Investment Review Board.
Emergent's Farm-in Agreement with De Grey for the Beyondie Iron Project will terminate at completion of the Purchase and Sale Agreement, and it will acquire 100% ownership and title to the Project tenements will pass to Emergent. De Grey will retain the rights to all non-iron ore minerals.
Key terms of the proposed Purchase and Sale Agreement are attached to this announcement. Emergent Managing Director Garry Hemming said: "We are very pleased to have entered into the Purchase and Sale Agreement with De Grey for us to acquire 100% ownership of the Beyondie Iron Project. The transaction provides us with certainty on the terms, and future equity and profit share for Emergent and our partner, CMIC, in the Development Joint Venture for Beyondie."
Background
In February 2008 Emergent entered into a farm-in and joint venture agreement with De Grey under which Emergent could earn up to 80% interest in iron ore and associated minerals on exploration licence E52/1806 and exploration licence application ELA 52/2215 (the Project).
Those tenements comprised part of De Grey's Beyondie Project located in the northern region of Western Australia's Mid-west Iron Ore Province.
Under the terms of that agreement, Emergent could earn an initial 60% interest in the Project by sole funding $750,000 exploration expenditure and a further 20% interest by sole funding a further $1 million expenditure, after which De Grey would retain, 20% free carried interest to a decision to mine. The effective commencement date of the first earning period was 10 November 2008 and on 21 July 2009 Emergent served notice that it had satisfied the requirements of its Stage 1 earn-in and had therefore moved to 60% interest in the Project.
Emergent has since continued to sole fund a substantial exploration program at Beyondie and is close to fulfilling the second-stage 80% earn-in expenditure. (Refer to Emergent's previous ASX releases on the ongoing exploration results at the Project.)
In July 2009 Emergent announced that it had entered into a non-binding Memorandum of Understanding (MOU) with CMIC. The MOU provides for establishment of a 50:50 Development Joint Venture and provision of $200 million funding to establish mining operations at the Project.
The MOU also provides for a placement of Emergent shares and options to CMIC to raise an estimated $4.9 million as additional working capital for Emergent. The execution of a formal joint venture agreement is subject to CMIC's satisfactory due diligence, which it is currently undertaking. (Refer to Emergent's ASX release dated 3 July 2009 for further details).
