Gulf Manganese Corp. Ltd. agreed to acquire up to 100% of privately held Australia-based manganese explorer Iron Fortune Pty. Ltd., which is focused on East Timor.
The company will initially pay A$100,000 for an exclusive due diligence period and will work with Iron Fortune to develop a work plan and wider strategy, with Managing Director Hamish Bohannan to be appointed to the Iron Fortune board as a nonexecutive director.
Gulf Manganese will then pay A$200,000 and issue A$100,000 of shares within 90 days to secure an initial 20% interest in the company, according to an Aug. 2 release.
The company will also commit to spending A$300,000 by Aug. 31, 2020, to earn a 35% interest in Iron Fortune and a further A$300,000 in the following year to take its stake to 51%.
Following the 51% earn-in, Gulf Manganese will complete a mining study and reach a decision to mine to increase its interest to 80%, following which Iron Fortune shareholders will have the right to fund mining and development costs on a pro-rata basis. If Gulf Manganese acquires all of Iron Fortune, current shareholders will receive a 2.0% net royalty on profit.
"Gulf's investment in Iron Fortune underpins our vertically integrated mine gate to production acquisition strategy and provides an excellent opportunity to diversify our asset base beyond Indonesia," Bohannan said.
The company recently acquired the Putra Indonesia Jaya high-grade manganese mine in Timor, Indonesia, to secure ore supply for its Kupang smelter in the country.