Mineral Resources - Farm-in and Joint Venture Agreement with Brockman Mining Ltd
Mining services contractor Mineral Resources (ASX: MIN) has taken a significant step towards fulfilling its Pilbara iron ore ambitions after striking a farm-in and joint venture agreement with Brockman Mining (ASX: BCK). Under the deal, MinRes can secure 50% of the 1.5 billion tonne Marillana resource, 100km north-west of Newman. Marillana tonnes will help MinRes underpin development of a 320km light rail system to Port Hedland and a berth at South West Creek.
Mineral Resources (ASX: MIN; MRL or the Company) is pleased to announce that it has executed a Farm-in and Joint Venture Agreement (FJVA) with Brockman Mining Limited (SEHK Stock Code:159; ASX: BCK; Brockman) that grants MRL the right to acquire a 50% interest in the Marillana iron ore project (Marillana) in the Pilbara, Western Australia.
Overview of FJVA
The FJVA provides for the following arrangements:
(a) Conditions Precedent
- Brockman obtaining the necessary regulatory approvals required in Australia and Hong Kong to proceed with the transactions contemplated by the FJVA;
- Brockman obtaining approval from a majority vote of the Shareholders to enter into the FJVA and proceed with the transactions contemplated by it;
- the parties executing the Process and Loading Agreement and the Mine to Ship Logistics Agreement; and
- the parties executing a Loan Agreement in respect of an A$10M loan that MRL will make to Brockman with such loan being repayable by Brockman as a priority from proceeds it receives from the sale of its share of Marillana iron ore.
None of the above conditions may be waived.
(b) Farm-in obligations
In order to acquire its 50% interest, MRL must first:
- expend A$250,000 on exploration and development activities on the Marillana tenements; and
- complete the process design criteria of the processing plant(s), optimise its mine plan study and finalise its mine development layout plan.
(c) Unincorporated Joint Venture
Once MRL has satisfied its Farm-in Obligation, Brockman and MRL will form an unincorporated 50:50 joint venture (Marillana JV).
(d) Joint Venture Manager
MRL will be appointed the Marillana JV Manager.
(e) Production Volume
Initially, the Marillana JV will develop and operate a 20Mtpa iron ore export operation on the tenements, with potential to increase the production capacity to 30Mtpa.
(f) Mine Development
Development of the mine site and installation of the key non-process infrastructure and utility assets are estimated to cost a maximum of A$300 million (JV Assets). MRL, in its capacity as JV Manager, will operate and maintain the JV Assets on behalf of the Marillana JV. The cost will be split 50:50 among the Marillana JV partners.
During the Farm-in phase, Brockman and MRL will determine whether to subcontract or self-perform the drill & blast and mining services necessary to extract and deliver run-of-mine ore to the processing plant(s).
(h) Crushing and Processing
MRL will enter into a life-of-mine mining services agreement with the Marillana JV pursuant to which MRL will build, own and operate the crushing and beneficiation plant(s) and product stockyard and train load-out facility. MRL will process the run-of-mine ore to produce 20Mtpa of iron ore product (potentially rising to 30Mtpa) on behalf of the Marillana JV and load it onto MRL’s rail system for transport to port.
(i) Mine to Port transport & shiploading
MRL will enter into a life-of-mine “mine-to-port transport and shiploading” agreement with the Marillana JV pursuant to which the Marillana JV will be granted access to MRL’s Pilbara Infrastructure Project. Under this agreement:
- The Marillana iron ore product will be transported via MRL’s 320km Pilbara light-rail system from the mine site to Port Hedland;
- Once in Port Hedland, the product will be unloaded and stockpiled in MRL’s fully automated train receival and port stockyard; and
- The product will then be reclaimed via bucket wheel reclaimer, conveyed to the export facility that MRL intends to construct and operate within the inner harbour of Port Hedland where it will be loaded onto Capesize carriers for export to Asian markets.
MRL Managing Director Chris Ellison said, “I am extremely pleased to have reached this farm-in and joint venture agreement with the board of Brockman.