14/08/2008 - 10:26

Portman to buy iron projects for $10m

14/08/2008 - 10:26

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Junior explorer Iron Mountain Mining Ltd was forced to go into a trading halt due to a mistake made by Portman Ltd over a $10 million iron ore deal.

Portman to buy iron projects for $10m

Junior explorer Iron Mountain Mining Ltd was forced to go into a trading halt due to a mistake made by Portman Ltd over a $10 million iron ore deal.

Portman yesterday jumped the gun in releasing a statement to the market over its acquisition of two iron ore projects in Western Australia from Iron Mountain, forcing the company to enter into a trading halt.

In a boardroom radio interview today, Iron Mountain managing director Keith Whitehouse said it was a slight mistake on Portman's behalf.

"There was an internal mistake at Portman and they announced it a little bit early and we then had to go into a trading halt while the finalised documents were signed," Mr Whitehouse said.

Both companies have entered into an option agreement over Iron Mountain's Mt Richardson tenement and the Windarling East tenement application, subject to due diligence by Portman.

Under the deal Portman will make an initial payment of $3 million on or before October 1 and Iron Mountain will hold a two per cent royalty of the price of iron ore production from the tenements.

Additionally, Iron Mountain will also receive a one-off payment of 50 cents per dry tonne on tonnages exceeding 10 million tonnes of an independently verified resource.

 

Below is the full announcement:

 

Iron Mountain Mining Ltd (ASX code: IRM) is pleased to announce that it has received and accepted a letter of offer from Portman Mining Ltd (Portman) (ASX code : PMM) covering the acquisition of IRM's Mt Richardson tenement E 29/571 and the Windarling East tenement application E 77/1267.

The companies will enter into an option agreement over the leases which provides for :

A total of $ 10,000,000 subject to agreed milestones including an initial payment of $ 3,000,000 on or before 1 October, subject to PMM completing due diligence.

IRM will retain a 2% royalty of the FOB price of Iron Ore products from the tenements and in addition will receive a once only payment of $0.50 per dry tonne on tonnages in excess of 10,000,000 tonnes of independently confirmed JORC defined Indicated or Measured Resource.

Over the last year IRM has had encouraging results from work it has carried out on its Mt Richardson tenement E 29/571. This work has attracted the interest of several parties and the company received unsolicited offers from other groups.

When considering the offers it has received the company has used a conceptual target of 18 -22m tonnes of Fe at a grade of 56 - 59% as the basis for determining the value of the offer. It should be noted that this is a conceptual target only, it is not a JORC resource as it is not supported by drill results. It does however reflect IRM's evaluation of the potential of the project based on initial drilling reported earlier this year.

IRM's Windarling East tenement (E 77/1267) is included in the agreement. This tenement is still under application.

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