Under a newly formed farm-in joint venture agreement, Mineral Resources and Brockman Mining will be going 50/50 on the Marillana iron ore project in the Pilbara region of Western Australia.
Through a farm-in and joint venture agreement, Mineral Resources (ASX:MIN) will be acquiring a 50-percent interest in Brockman Mining’s (ASX:BCK) Marillana iron ore project in the Pilbara region of Western Australia.
In order for MinRes to acquire the 50-percent interest, the company must spend AU$250,000 on exploration and development activities on the Marillana tenements.
The company must also complete the process design criteria for a processing plant, optimize a mine plan study and finalize a mine development layout plan.
Following those obligations, the companies will form a 50/50 joint venture called the Marillana JV, with MinRes as the manager. The initiative is expected to develop and operate 20 million tonnes per year of iron ore on the tenements, with the potential to push production capacity to 30 million tonnes per year.
Development of the mine site and infrastructure installation is expected to cost a maximum of AU$300 million, which will be split evenly between the two companies.
The joint venture agreement also entails MinRes entering into a life-of-mine transport and ship-loading agreement, where both companies will be given access to MinRes’ Pilbara infrastructure project.
Through this clause, iron ore from Marillana will be transported by MinRes’ Pilbara light-rail system from the mine to Port Hedland. It will then be brought to an export facility that MinRes has plans to construct and operate within Port Hedland for export to Asian markets.
“I am extremely pleased to have reached this farm-in and joint venture agreement with the board of Brockman,” Chris Ellison, MinRes managing director, said in a statement.
“The boards and management teams of [MinRes] and Brockman have a shared vision for the future of the Marillana project. Both companies recognise that [MinRes] is firmly on track to commence construction of its Pilbara infrastructure project by the middle of 2019 such that the timing was right to formalise an arrangement that will see us work together to bring the project into operation,” he added.
The Marillana project area spans 82 square kilometers in the Hamersley Iron Province of Western Australia’s Pilbara region, with extensive areas of supergene iron ore mineralization. The project has a total iron ore mineral resource of 1.51 billion tonnes, with an orebody that Brockman claims could produce a saleable product grade of at least 60-percent iron.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.