Sale of JWD Iron Ore Mining Rights

CuFe Ltd (ASX: CUF) (CuFe or the Company) is pleased to advise it has entered a binding term sheet for the disposal of:

(a) 100% of its rights, title and interest in the Iron Ore Rights;

(b) the rights and obligations under all associated contracts, authorisations and permits required to operate the JWD mine;

(c) the benefit of all contributions made by CuFe and/or WFE to the rehabilitation fund established for the purpose of satisfying the rehabilitation obligations pertaining to mining at the JWD mine; and

(d) all of its rights, title and interest in certain stockpiles of iron ore, overburden and waste material located at the JWD mine, (together, the Assets).

HIGHLIGHTS

• CuFe, via its wholly owned subsidiary Wiluna Fe Pty Ltd (‘WFE”), has entered a binding agreement to sell the iron ore rights pertaining to the JWD iron ore mine (Iron Ore Rights) to Newcam Minerals Pty Ltd (Newcam Minerals).
• Sale consideration is $12m dollars cash, with $0.5 million deposit and $11.5m payable on completion of the transaction, which is subject to various conditions including approval of CuFe shareholders.
• Sale proceeds will primarily be used settle trade creditors, which remain the responsibility of WFE. WFE retains rights to certain inventory on hand at the date of signing, existing hedges and debtors and is responsible for costs incurred up until completion, certain of which will be reimbursed by Newcam post completion. The final reconciliation of funds to be generated from those items is to occur once provisionally priced shipments are finalised, hedges settled and costs compared to sales proceeds over the period to completion are known, with a current estimated range of $1.5-3m net inflow to CuFe.
• CuFe and Newcam have agreed the JWD mine will move to suspend operations while the ownership transition occurs given the current challenging conditions in the iron ore market, to preserve the value of ore in the ground.
• Transaction will simplify the Company’s business by removing the cash flow volatility associated with operating an iron ore mine and remove exposure to losses being incurred at current iron ore price, thus allowing the Company to be well funded for management to focus on progressing its suite of prospective assets including our advanced Tennant Creek Copper / Gold project, Yarram iron ore project and a raft of prospective exploration projects including North Dam, West Arunta and Tamborough.

We could suspend the mine as we have done before and wait for the market to improve but this consumes cash to ramp down and ramp up and having had the experience of operating it for more than 3 years we consider the scale of JWD means it is best run as a private business that is very flexible as to how and when the mine operates, which reflects Newcam’s model, so believe this sale is the best way forward.

We look forward to working closely with the Newcam team to finalise the transaction and transitioning operatorship and thank all of those who have supported our efforts to date at JWD.”

Transaction Overview

WFE a 100% owned subsidiary of CuFe Ltd owns 100% rights, title and interest in the Assets, including the rights to extract iron ore from the JWD deposit located near Wiluna in WA, and has agreed to sell those rights to Newcam for $12 million cash. WFE remains responsible for the JWD trade creditors outstanding at present (which approximate $8m outstanding on normal 30 day terms and approximately $4m payable to Newcam for iron ore sales proceeds from sale of material from the Mt Gould mine made on their behalf under a shared shipment arrangement). WFE is also responsible for creditors occurred until the time of completion unless mining or processing of material owned by Newcam, in which case CuFe will be reimbursed at completion. WFE retains ownership of certain stockpiles on hand at date of signing (approximately 50,000t of final product and 50,000t of RoM product) which it can realise moving forward, its hedge positions and trade debtors.

The final reconciliation of the proceeds received from these will be determined occur once provisionally priced shipments are finalised, hedges settled and costs compared to sales proceeds over the period to completion are known with a current estimated range of $1.5-3m net inflow to CuFe.

Key conditions precedent to the transaction, which are to be satisfied not later than 31 October 2024 include:

• CuFe shareholder approval for the purposes of ASX Listing Rule 11.2, with a Notice of Meeting to be issued shortly;
• Assignment of existing or entry into new offtake arrangements between Glencore and Newcam; and
• Necessary regulatory approvals and third-party consents including that of the tenement owner.

Next Steps

Following discussions with ASX CuFe was advised the disposal of the JWD mining right will be subject to the approval of CuFe shareholders. Preparation of a notice of meeting is underway, with the meeting to be scheduled as soon as possible, likely early October 2024. The mine will be transitioned into care and maintenance while that occurs to preserve cash and resource in the ground during the interim period.

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