Fe Limited set for new Hillside work program after boosting cash at bank to $5.2 million

Fe Limited (ASX:FEL) has received $3.46 million from a first instalment of its $7 million sale of the Evanston Iron Ore Royalty and is about to start a new work program at the Hillside Gold-Copper Project in WA. Proceeds have taken the company’s cash at bank to $5.2 million with the March quarter royalty payment received by FEL being subtracted from the $4 million instalment. A second instalment of $3 million is payable in 12 months, with the instalment secured over the royalty. “Locking in attractive valuation” FEL chairman Tony Sage said: “The completion of this sale is an excellent result for FEL, locking in an attractive valuation approximately equivalent to the company’s current market capitalisation, for a non-core asset. “We now have $5.2 million in the bank, with a further $3 million to come next year." Shares have been up more than 14% to 1.6 cents intra-day. The royalty, which covers a portion of the Koolyanobbing Iron Ore Mine in Western Australia, has been sold to TRR Services Australia Pty Ltd, a subsidiary of Trident Resources PLC (LSE:TRR). The effective date of the transaction is January 1, 2020. Certainty in financial position This non-core asset sale provides certainty for FEL’s financing position as the royalty stream is variable and depends on a range of factors such as the iron ore price, currency and production rates over which the company has no control. Sage added: "That gives us certainty over funding our upcoming exploration programs at our prospective Hillside project and an ability to fund other value accretive acquisitions should they be identified.” The stronger cash position enables the company to advance exploration at Hillside, for which FEL has entered into an earn-in agreement with Macarthur Minerals Limited (ASX:MIO) (CVE:MMS). This agreement covers eight Macarthur tenements in the Pilbara region. Ground survey planned FEL is finalising plans to conduct a Fixed Loop Electromagnetic Survey (FLEM) ground survey at Hillside. This will cover a section of a previously identified gossan line as well as a series of individual FLEM surveys over previously identified high-priority SkyTEM electromagnetic targets in the general Hillside tenement group. The company expects that results will enable it to better indicate any massive sulphide mineralisation which may exist to assist in targeting ahead of the next drilling campaign which is expected later this year. Results from the previous first phase drilling were very encouraging with three holes positively identified to have intercepted down-dip extensions of a surface gossan. The three identified holes showed anomalous intercepts spanning the full length of the 14-kilometre strike.