THE BOURSE WHISPERER: One managing director who will be eager to present at next week’s RIU Sydney Resources Round-up is Trafford Resources’ (ASX: TRF) Ian Finch.
By the time he arrives at the podium, however, Finch will be wearing his IronClad Mining (ASX: IFE) helmet and will, no doubt, be biting at the bit to inform delegates of the benefits of the recently-sanctioned merger between the two companies.
The merger was received its final tick of approval this week when the Federal Court approved the relevant Schemes the day after Trafford shareholders and option-holders gave their collective thumbs-up to the deal.
The idea to merge the two entities gained legs earlier this year, which resulted in the execution of a Merger Implementation Agreement (MIA) leading to IronClad acquiring all of the issued shares in Trafford under a Scheme of Arrangement.
IronClad was originally spun out of Trafford in 2007 with the purpose of developing the Wilcherry Hill iron ore project with Ian Finch and Neil McKay having seats around each Boardroom table.
Everybody talks about the cyclic nature of the mining industry and it is no better demonstrated in the idea of IronClad swallowing its parent company to allow both to concentrate their combined efforts on their – once-again – combined project portfolio.
The recent fall in the iron ore price made the development of the final stages of IronClad’s Wilcherry Hill iron ore project more difficult than the company would have imagined back when it all began, even though it is tantalisingly close to being ready.
IronClad has progressed Wilcherrry hill to the point where it has all the infrastructure in place necessary to bring the project into operation, unfortunately the current iron ore price means it would just not be profitable – and in that case sensible – for the company to hit the button.
Because of this the project has been put to rest for the time being, which means IronClad – being a one project company, would be looking for other avenues to keep busy.
“The Board of IronClad, and Trafford, decided that going forward, and to survive in this market a merger of the two companies seemed a compelling case,” Trafford Resources independent director Mark Le Grange recently told The Resources Roadhouse.
Le Grange said the merger offered the two companies a much broader commodity exposure.
It combines IronClad’s near-production scenario at Wilcherry Hill with Trafford’s exploration potential, which includes occurrences of manganese and tin where the merged entity has indicated its intentions to establish pre-feasibility studies on both, as soon as possible.
The deal will consolidate the company as a major player in South Australia, which is currently enjoying something of a mining jurisdiction renaissance with a great deal of activity on the Eyre Peninsula and the area surrounding the approximate 10,800 square kilometre tenement holdings of the ‘new IronClad’.
The new entity would also benefit from the obvious reduction of administration costs.
“The merger essentially made sense, in such that we could rationalise the position of the iron ore assets within IronClad to become part of the bigger picture of our landholding in South Australia,” Le Grange said.
While IronClad developed the Wicherry Hill iron ore mine, Trafford had kept busy establishing a number of its own assets in the region.
In 2013, Trafford announced a drilling intersection of 7 metres at 3.16 per cent tin at the Zealous prospect within its Wilcherry Hill tenements.
The company followed this up with a new discovery of high-grade silver at the Sunday Iron propsect in the Black Hill prospect area.
A re-assaying program enabled the company to identify a number of high-grade tungsten intersections within the Wilcherry Hill area.
This resulted in veins at Ultima Dam West and Golden Gate returning assays of 1m at 1.43 per cent tungsten and 1m at 7.2 per cent tungsten.
Tungsten associated with silver intersections was also encountered at both prospects, including:
28m at 45.6g/t silver with 593ppm tungsten at Ultima Dam West and 41m at 56.2g/t silver with 0.11 per cent tungsten, including 5m at 198.8g/t silver with 0.15 per cent tungsten at the Golden Gate prospect.
Drilling carried out by IronClad at the Hercules prospect within the Wilcherry Hill project aimed at near surface Direct Shipping Hematite Iron intersected 23m at 22 per cent manganese from 55m.
This intersection included 7m at 28 per cent manganese and 4m at 29 per cent manganese.
“Although Wilcherry Hill is blessed with a lot of other commodities, our focus going forward is development of the West Gawler Craton gold project,” Le Grange explained.
The new entity has flagged its intention to continue to develop Western Gawler Craton project where it has access to approximately 7,100 square kilometres of prospective and vastly under-explored ground surrounding the multi-million ounce Challenger gold mine operated by Kingsgate Consolidated (ASX: KCN).
Trafford has a 51 per cent interest in a JV with Kingsgate for exploration surrounding the Challenger Gold Mine.
When it originally acquired the JV from Southern Gold a few years ago, Trafford was surprised to see that since the discovery and development of Challenger – there has been very little work carried out in the area with the only work being a small program carried out by Southern Gold in 2009.
“We see this merger as a real opportunity for the two companies, and more importantly, the shareholders of the two companies,” Le Grange said.
“We have a pipeline of projects there, including around four high-priority target areas that are currently in the process of being converted into first-pass Resources.
“We believe we are putting together a story at Wilcherry Hill that we can take to the market and to investors that will reignite the exploration in this area.”