Mineral Resources Ltd. signed a binding heads of agreement to purchase Cazaly Resources Ltd.'s Parker Range iron ore project in Western Australia, including the mining information, contracts and authorizations.
The company said Aug. 21 that it will pay A$20 million and a royalty of 50 Australian cents for every dry tonne of iron ore extracted from the tenements, payable after the first 10 million dry tonnes and subject to successful due diligence within 21 days.
Cazaly said the same day that it terminated the exclusivity period with Gold Valley Iron Pty. Ltd. as the offer from Mineral Resources was more favorable. Cazaly plans to use the funds from the disposal to expand exploration activities on current projects, seek new project opportunities and for working capital.
However, the agreement with Gold Valley will remain in place while Cazaly evaluates the proposal from Mineral Resources. Cazaly will pay a A$250,000 break fee if it terminates the deal with Gold Valley.
In June, a Cazaly unit agreed to enter into a three-month due diligence period with Gold Valley to sell Parker Range for A$13 million plus royalties ranging from 50 cents to A$1.00 per tonne.
Mineral Resources and Cazaly plan to enter into a sale and purchase deal and a royalty agreement within 30 days.
The Parker Range project has a proven and probable ore reserve of 31.4 million tonnes targeting an iron ore fines product grading 56.4% iron and 0.02% phosphorus, 6.0% silicon dioxide and 2.50% aluminum oxide.
