Sheffield sells South Pilbara tenements to Brockman

THE BOURSE WHISPERER: Sheffield Resources (ASX: SFX) has struck a binding agreement with Brockman Mining Limited subsidiary, Brockman Australia (ASX: BCK) to sell its interests in two exploration licences E47/2280, E47/2291 and exploration licence application E47/2594, collectively known as its South Pilbara iron tenements.

The material terms of the agreement are:

–    An upfront cash payment of $1 million;

–    A supplementary payment of 10 cents per tonne for all JORC compliant Mineral Resources (Measured, Indicated and Inferred categories) defined on any or all of the tenements, using a lower cut-off grade of 54 per cent iron;

–    A royalty of 1 per cent Free On Board (FOB) of all iron ore produced from the tenements. In addition, a price participation royalty of 5 per cent would be applicable for all revenues received over $120 per tonne FOB (CPI indexed) for iron ore sales from the tenements (i.e. an additional 4 per cent on the amount by which the indexed FOB price exceeds $120 per tonne);

–    Brockman to use best endeavours to complete a resource drill programme and resource estimate within 12 months; and

–    Completion may be subject to the satisfaction of FIRB approval.

Sheffield has previously outlined an Exploration Target of 20 to 60 million tonnes at 56 to 60 per cent iron on the sale tenements and identified further iron mineralisation.
 
Sheffield said the deal recognised the need for iron ore developers to consolidate resources to achieve infrastructure solutions in the Southern Pilbara, something which it considers Brockman well placed to do.

“While we believe that our iron projects carry significant value, our current priorities are the Dampier mineral sands and Red Bull nickel projects,” Sheffield Resources managing director Bruce McQuitty said in the company’s announcement to the Australian Securities Exchange.

 

Map showing location of acquired tenements in relation to Ophthalmia
tenements and deposits. Source: Brockman Mining announcement

 

The sale tenements are adjacent to Brockman Mining’s Opthalmia project, which has combined Mineral Resources of 269 million tonnes at 59.16 per cent iron.

“The consolidation of these tenements further cements Brockman’s presence in the region and is a logical step in the development of Ophthalmia,” Brockman Australia CEO Russell Tipper said in his company’s ASX announcement.

“As well as the possibility of identifying additional Mineral Resources, the increased project footprint provides greater flexibility in the location of processing and transportation infrastructure.”

Brockman said it considered the Ophthalmia Mineral Resources of particularly significance in the context of ongoing feasibility studies into an Independent East Pilbara Railway, being carried out by Brockman, Aurizon Holdings and Atlas Iron.