Tao to acquire iron ore junior

Subiaco-based Tao Commodities has added to the growing interest among junior mining companies in the Western Australian iron ore sector, after it signed a binding term sheet to buy DSO Mining in a scrip deal worth at least $3.27 million.

Under the agreement, the Mark Connelly-chaired Tao will pay a fee of 416,667 ordinary shares upfront, and around 22.92 shares million once the acquisition is settled.

At its current price of 14 cents each, this equates to around $3.27 million.

Additionally, DSO will receive 15 million options at an exercise price of 30 cents each with a four-year expiry, and 12.5 million of performance shares that will vest into ordinary shares on a 1-for-1 basis.

It will also receive a 2 per cent net smelter royalty from future production.

Tao will fund the purchase through a $2.5 million capital raising at 12 cents per share.

The privately-owned DSO owns four iron ore exploratory projects; two in the Pilbara, and two near Wiluna.

Tao currently has base metals investments in the US state of Utah.

The acquisition by TAO renews activity of iron ore project transactions during a surge in the commodity’s price in the first half of the year.

In June, Mineral Resources paid $13 million to buy Cazaly Resources’ Parker Range project, while Venus Metals sold its stake in the Yalgoo project to FIJV for $2.5 million.

Additionally in WA, Fenix Resources is scheduled to release the feasibility study for its Iron Ridge iron ore project by the end of this month, while Macarthur Minerals is conducting a bankable feasibility study for its Lake Giles iron ore project in the Yilgarn region.

Canada-based Macarthur, which is listed on the TSX Venture exchange, is also workig on an ASX dual listing, having engaged Shaw and Partners this month as lead manager.