24/02/2009 - 15:06

Epsilon in iron deal with Chinese agent

24/02/2009 - 15:06

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A company that acts as an agent for emerging Chinese steel mills has signed a deal with explorer Epsilon Energy over the Mardie iron ore project in the Pilbara.

Epsilon in iron deal with Chinese agent

A company that acts as an agent for emerging Chinese steel mills has signed a deal with explorer Epsilon Energy over the Mardie iron ore project in the Pilbara.

Chinese company Hebei Resources and Epsilon have signed a memorandum of understanding to consider the joint development Mardie, which has an exploration target of up to 1.1 billion tonnes of iron ore.

Under the MoU, Hebei and its partners will fully fund exploration and development over a three-year period through to a decision to mine by way of a farm-in agreement.

Shares in Epsilon closed up 0.2 cents to 4.8c today.

 

 

The announcement is below:

 

The board of Epsilon Energy Limited (ASX:EPS) is pleased to announce it has signed a Memorandum of Understanding (MOU) with Hebei Resources Pty Ltd (Hebei), to consider cooperative development of the Mardie Iron Ore Project in the Pilbara Region, WA.

The MOU is aimed at advancing discussions to secure an exploration and development agreement for the Mardie Iron Ore project, where the Company has outlined a significant hematite and magnetite iron target and has recently been granted authorisation to explore for iron ore by the WA Minister for State Development.

The MOU contemplates Hebei (and its partners) fully funding exploration and development over a three year period through to decision to mine by way of a farm-in agreement. It is then envisaged each party will enter a joint venture and either contribute equally or dilute appropriately, to proceed through to production and shipping of iron ore from the Mardie Iron Ore project.

Hebei Resources Pty Ltd is a global agent for a number of emerging Chinese Steel Mills whose mission is to consolidate the Iron ore requirements its member Steel Mills in China, and bridge it with the potential capacity of emerging Australian junior Iron ore companies to create a long term win-win business relationship. With an operation in Beijing and exclusive agreement aligned to Hebei Xinli Steel & Iron Company Ltd to deal with Epsilon over the exploration and development of the Mardie Iron Ore Project, Hebei is represented by board of experienced senior executives in the resources and trading sectors between Australian and China.

The Mardie Iron Ore project area covers 224km2 and is located 110km south-west of Dampier in the world class Pilbara mining region. The project has easy access to major regional labour and services centres of Dampier and Karratha, is close to water sources in the Robe River Delta, and is traversed by the Goldfields natural gas pipeline. The Cape Preston Port and Infrastructure facilities are being constructed just 35km to the north east of the project.

Epsilon has achieved significant progress since acquiring the Mardie project in April 2008.To date, the Company has:

completed computer modelling of geophysical surveys which confirmed the potential for substantial iron mineralisation, including a hematite/detrital target and significant deeper magnetite target

commenced negotiations for a Land Access Agreement with traditional owners

commenced drill optimisation programs

secured WA Government approval to explore and develop iron ore resources at the tenement.

The Company is currently finalising arrangements to provide Hebei with access to all project data as part of its due diligence review. Hebei is also expected to make a site visit to Mardie during an upcoming field survey drill hole siting program. Epsilon will inform the market of any material progression as appropriate.

 

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