Fe Limited extends exposure to strong iron ore market by securing mining rights for production-ready project

Fe Limited (ASX:FEL) is extending its exposure to an iron ore industry that is performing strongly with positive fundamentals for future growth, through acquiring a 51% interest in the Mining Rights Agreement for a production-ready WA project. The company has entered a binding JV agreement to acquire 51% in the Gold Valley Iron Ore (GV) Mining Rights Agreement over the Wiluna West JWD deposit wholly-owned by GWR Group Ltd (ASX: GWR). This deposit has a JORC 2004 estimate of 10.7 million tonnes at 63.7% iron and low impurities using a 55% iron cut-off, with 60% classified as a measured resource. Most development work completed There has been significant development work completed, including resource optimisation, pit design and mine plan, with the majority of approvals in place including a Project Management Plan (PMP), which was approved in January 2020. The Mining Rights Agreement requires a minimum of 300,000 tonnes to be mined and trucked from the tenement within 21 months of the PMP approval date. Targeting early start As a result, FEL, which will operate to the JV with its 51% stake, will target early start operations to meet this date and take advantage of current high iron ore prices . FEL chairman Tony Sage said: “Together with the recent announcement of FEL’s purchase of the Yarram Iron Ore Project, this acquisition cements our view that shareholders will benefit greatly from exposure to the positive outlook and high prices of iron ore. “We believe both projects offer a real chance of early cashflows given the work that has already been completed. “Our key focus now is continuing to build an experienced and focused management team to exploit these assets as quickly as possible.” Synergies with Yarram acquisition The addition of this project into the FE iron ore portfolio has strong synergies with the planned acquisition of the Yarram Iron Ore Project in the Northern Territory by providing a portfolio of projects that can be progressed by the same team. The Wiluna West project in its entirety has been studied by GWR Group for some time and has undergone multiple phases of resource estimation and periodical upgrade with the addition of increased drill density over time. GWR Group has divided the deposit into sub-sets and has sold the mining rights for the JWD deposit to GV. JORC 2012 estimate planned The estimate of mineral resources is not reported in accordance with JORC 2012 and it is possible that following further evaluation, the estimate may materially change and hence will need to be reported afresh under and in accordance with the JORC Code 2012. No further exploration or resource definition is required on the deposit and future drilling will only be grade control conducted as part of the mining operation. The company does not anticipate undertaking further exploration prior to reporting a mineral resource estimate under JORC 2012, but rather will as soon as reasonably practicable evaluate the existing exploration and report accordingly. Iron ore prioritised With the renewed focus on iron ore and strong market fundamentals, FEL has elected to withdraw from the joint venture over the Pilbara tenement group with Macarthur Minerals Limited (ASX:MIO). The board has decided that it wishes to prioritise the remaining earn in payments and expenditure required on the Macarthur tenure for its brownfield iron ore projects. FEL considers that these projects present higher earnings potential over a shorter time frame and lower risk profile.