Exploration and feasibility work will commence at Matsa Resources’ Dundas iron ore project with significant investment from Chinese manufacturer Shandong Shanshi International Trading through its subsidiary Haina Resources.
Matsa announced today a binding terms sheet had been signed with Haina, with a 90 day due diligence period in which a formal agreement will be finalised commencing immediately.
Under the terms of the investment, Haina will take a placement of 4 million shares in Matsa at a minimum of 26 cents, with a first payment of $286,000 already paid.
Haina will pay a further $1.95 million to Matsa on completion of stage 2 of a proposed evaluation study at the Goldfields Esperance region project to begin in 90 days.
The deal also offers a range of flexible development options, including Haina to spend $7 million on exploration and evaluation costs within 18 months, or transfer $7 million to Matsa for exploration and evaluation purposes to earn 60 per cent of the project.
Haina will fund and complete a $20 million feasibility study within two years of the completion of the evaluation study, raising its interest to 76 per cent.
Finally Haina will fund up to the commencement of the project to earn a maximum of 80 per cent in the project, with Matsa’s share to be free carried.
Matsa executive chairman Paul Poli said the terms sheet was an important milestone in the company’s on-going commitment to develop its Dundas iron ore project.
“The agreement with Haina provides Matsa with the means to develop our Dundas iron ore project,” he said.
“Despite turmoil on international and local markets and knock on effects to commodity prices we remain confident that demand for iron ore will continue to be high.”
Matsa shares were up one cent to 21.5 cents at 10.20 WST.
