Shares in Atlas Iron-backed Warwick Resources have closed 17 per cent higher on a $10 million deal with Hannans Reward to acquire the iron ore rights from the latter's east Pilbara Jigalong project.
Leederville-based Warwick's share price climbed 11 cents to a high of 34c before easing to 27c at close.
Under the deal, Warwick will acquire, following due diligence, the iron ore rights to Hannans' Jigalong project which has an exploration target of between 50 to 100 million tonnes of iron grading at around 58 per cent.
Jigalong is located near Warwick's Woggaginna iron ore project which also has the same exploration target.
Warwick said the deal is the "important first step in the consolidation process of iron ore projects located in the east Pilbara".
Fellow iron ore explorer Ferraus currently holds two iron ore projects located in between Jigalong and Woggagina.
Warwick added that "development options will be investigated with other iron focused companies with a view of establishing a new iron ore mine in the region".
Woggagina is also located next to the Jimblebar iron ore mine, owned by BHP Billiton which has no immediate plans to share its rail infrastructure.
The Jigalong iron ore rights acquisition deal also has the backing of major Warwick shareholder, Atlas Iron, which holds an interest of around 19.5 per cent.
Warwick will pay an initial $5.2 million in cash Warwick and Atlas shares to Hannans for the iron ore rights, and will pay a further $4 million in cash and scrip on execution of the agreement.
Warwick will also issue Hannans a further 8.3 million of its shares once certain exploration targets are met.
Hannans will retain the rights to other minerals at Jigalong.
At the end of the initial share issues, Hannans will emerge with a 12 per cent stake in Warwick and will be allowed to nominate one representative to the board.
Additionally, Warwick has also entered into a convertible note agreement with Atlas where the Warwick will repay a $1.155 million loan through the issue of 7.7 million fully paid shares priced at 15 cents each.
On completion of the agreement, Atlas' shareholding in Warwick will increase to 22.37 per cent.
"This is a terrific result for Warwick, Atlas and Hannans and their shareholders," Warwick chairman Will Burbury said.
"Combining these iron projects creates a highly strategic land holding which will play an important role in unlocking an infrastructure solution in the region that can support a new mining operation."