Australian Aboriginal Mining Corporation (AAMC) has marked a milestone in Australian mining history that paves the way for the company to become this country’s first indigenous-owned iron ore mining company.
Underpinned by the proposed acquisition of the Wonmunna iron ore project 80km north-west of Newman, AAMC expects to start delivering iron ore to Fortescue Metals Group’s Cloudbreak hub by the fourth quarter of this year.
AAMC, a privately owned Perth-based company, has mandated experienced Perth corporate advisers PCF Capital to secure $30-35 million of capital to fund the Wonmunna acquisition and begin mine development by the third quarter of this year.
AAMC has signed a term sheet with Ascot Resources to acquire Wonmunna for upfront and time-dependent cash payments. AAMC expects to execute a formal sale and purchase agreement with Ascot in April 2018.
The Wonmunna acquisition is the final link in AAMC’s long-held ambition to create an iron ore mining business owned by Aboriginal people.
It delivers AAMC the iron ore reserve to mine and deliver to Fortescue under a landmark Iron Ore Sales and Purchase Agreement.
Subject to completion of the acquisition, AAMC will develop Wonmunna as a contract-mining operation.
AAMC has entered into an arms-length binding agreement to engage Carey Mining, one of Australia’s most successful and enduring Aboriginal mining contracting businesses owned by AAMC chairman Daniel Tucker.
Speaking on behalf of AAMC, Mr Tucker said: “AAMC’s proposed development of the Wonmunna Iron Ore Project establishes a milestone for Aboriginal engagement in Australia’s mining industry and should serve as a blueprint for the creation of more Aboriginal-owned mining companies in Australia.
“This is the future of Aboriginal involvement in the mining industry and will allow the traditional owners of the land to share in the wealth that is generated on their land by becoming owners in projects.
“We are very grateful to Fortescue for its support. This landmark deal would not have been possible without Fortescue, which enables AAMC to deliver iron ore to market, and Ascot for striking a commercially sensible deal over Wonmunna.
“We now look forward to getting on with the job of securing the necessary funding through PCF followed by the establishment of mining operations at Wonmunna.”
PCF Capital managing director Liam Twigger said the AAMC deals delivered a “terrific outcome … and real value” to all stakeholders.
“The terms governing AAMC’s proposed Wonmunna acquisition and the mine gate deal with Fortescue allow AAMC to develop a financially robust iron ore mining business with attractive margins at current spot prices, and downside price protection,” Mr Twigger said.
“Importantly, the unique nature of the mine gate deal and AAMC’s intention to utilise contract-mining means the capital cost required to begin mining at Wonmunna, relative to other projects, is extremely modest by Pilbara standards but the payback potentially significant.
“This smart three-way deal will hopefully be a springboard for other similar deals in the Pilbara.”
The Wonmunna iron ore deposit is located 80km north-west of Newman along the Great Northern Highway and hosts Marra Mamba-style iron ore.
Wonmunna has a JORC-compliant indicated and inferred resource of 84.3 million tonnes at an average grade of 56.5% iron. The resource includes a JORC-compliant reserve of approximately 20 million tonnes grading 59% iron.
Under the Iron Ore Sale and Purchase Agreement, AAMC will deliver ore to Fortescue’s Cloudbreak operations, about 190km by road from Wonmunna. AAMC intends to use a third-party road heavy haulage provider to transport the ore.
The Wonmunna mine project is expected to run for at least five years, operating at a rate of 2-5 million tonnes of iron ore annually with life of mine production of approximately 20 million tonnes.
AAMC expects the Wonmunna mine project to create 180 jobs during construction followed by 160 ongoing operational jobs.
