Anglo American farms-in to Earaheedy JV
THE BOURSE WHISPERER: The Earaheedy Joint Venture between Cazaly Resources and Vector Resources has signed a farm-in agreement with global diversified mining house Anglo American.
The farm-in agreement will cover part of Joint Venture’s Earaheedy iron project located in the Wiluna region of Western Australia.
“The dimensional extents and quality of the Earaheedy project will be further refined and enhanced as a consequence of this timely involvement by world leading miner, Anglo American,” Vector resources chairman Damien O’Reilly said in an announcement to the Australian Securities Exchange.
O’Reilly’s sentiments were supported by Cazaly managing director Clive Jones, who said the agreement with Anglo American recognised the substantial potential of the Earaheedy project and the need to have a major international mining house as part of its development.
“Earaheedy is a potentially major iron ore province and it needs the resources and expertise of a major player to develop it,” Jones said in the ASX announcement.
“Anglo American has the resources to invest in the development of this project and we, and our JV partner, are very happy to have their support.”
The Earaheedy project covers an area in excess of 1,700 square kilometres and includes a substantial strike extent of the iron ore prospective Frere Formation.
A recent drilling program carried out on a number of targets at the Earaheedy project returned encouraging results from the Cecil Rhodes prospect.
Results from the prospect included:
– 34 metres at 54.4 per cent iron, including 22 metres at 58.1 per cent iron; and
– 22m at 57.8% iron and 26m at 55.1% iron, all with low levels of contaminants.
The farm-in agreement relates to a specific area of approximately 890sqkm and allows for Anglo American to complete an initial “proof of concept” program.
This will consist of a minimum of 7,500 metres of reverse circulation (RC) or diamond drilling to be completed as due diligence within 18 months.
Once this has been completed, Anglo American may earn an initial 51 per cent interest in the project by payment of an initial one million dollars in cash to the Joint Venture and the additional spending of $20 million within four years.
After this, Anglo American can qualify to earn a total 75% interest in the project by completing a Bankable Feasibility Study and a further payment of $5 million.
Delivery of a positive BFS would then require Anglo American to make a success payment of $45 million, after which the Joint Venture may then elect to contribute to project expenditure or dilute to a royalty of 1.25% Fee On Board.
The Eeraheedy JV retains sole rights to the southern portion of the Earaheedy project area, which it considers to be prospective for manganese mineralisation.