Iron ore hopeful Emergent Resources has entered a $205 million deal with a Chinese firm over the development of the Beyondie magnetite iron project in the Mid West.
Iron ore hopeful Emergent Resources has entered a $205 million deal with a Chinese firm over the development of the Beyondie magnetite iron project in the Mid West.
The company and China Metallurgical Investment Co (CMIC) have signed a memorandum of understanding for a 50:50 joint venture over Beyondie, located in the northern area of the Mid West.
Emergent currently has the right to earn up to an 80 per cent interest in the overall Beyondie project from De Grey Mining.
Under the MoU CMIC will provide $200 million towards the project, subject to a three-month due diligence.
The initial production target for Beyondie has been set at 3 million tonnes each year of magnetite iron ore.
In addition, CMIC will also subscribe to 8.5 million shares at 45 cents each, raising $4.9 million for Emergent.
The announcement is below:
MOU WITH CHINESE GROUP FOR DEVELOPMENT OF BEYONDIE IRON PROJECT
Key Points
- Non-binding MOU with China Metallurgical Investment Co Ltd (CMIC) for the development of Beyondie Iron Project in WA's mid-west iron ore region
- CMIC to commence three month due diligence period within the next month
- MOU provides for a 50:50 Development JV and provision of AUD$200m funding to achieve commencement of mining operations at Beyondie Project
- MOU also provides for a placement of shares and an options to CMIC to raise an estimated AUD$4.9 million as additional working capital for EMG
Emergent Resources (ASX: EMG) is pleased to advise that it has entered into a commercial inconfidence non-binding Memorandum of Understanding (MOU) with China Metallurgical Investment Co Ltd (CMIC), a State Owned Enterprise (SOE) in the Peoples Republic of China (PRC) for the development of the Company's Beyondie Iron Project in Western Australia's midwest iron ore region.
The MOU provides for the establishment of 50:50 Development Joint Venture (DJV) and for the provision of AUD$200 million funding for the Beyondie Magnetite Iron Project (BMIP), subject to a satisfactory due diligence and completion contracts, to achieve the commencement of mining operations with an initial targeted production of 3Mtpa of magnetite concentrate.
Further, the MOU provides for a placement of 8,553,971 shares to CMIC at an issues price of AUD$0.45, together with the grant of a 1 for 2 option entitlement of 4,276,986 options at an issue price of AUD$0.27 and exercisable at AUD$0.20 on or before September 30, 2010. These shares and options will rank pari passu with Emergent's existing shares and options on issue to raise an estimated AUD$4.9 million as additional working capital for EMG.
The parties have agreed to an estimated three month due diligence period to begin within the next month. Emergent will not enter into fresh negotiations with new parties and will keep CMIC informed of existing negotiations with other parties.
The Beyondie Project is located in the northern region of the Mid West Iron Province in WA, immediately adjacent to the Great Northern Highway and Goldfields Gas Pipeline. Potential shared rail and port infrastructure developments are in progress. The Company plans to develop the project into a long life, large scale, high grade magnetite concentrate mining operation, and has the right to earn up to an 80% interest in the project by way of a joint venture with De Grey Mining Limited.
