Fe Limited acquires option to boost equity interest in near-production JWD Iron Ore JV to 60%

Fe Limited (ASX:FEL) is seeking to lift its exposure to the near-production JWD Iron Ore Joint Venture in Western Australia by acquiring additional equity interest for a 60% stake. The company has acquired an option to purchase the additional interest and has paid a A$1 million refundable deposit to its joint venture partner GWR Group Ltd (ASX:GWR). This provides a three-month option to increase FEL’s equity in JWD to 60% from 51%. Growing exposure FEL executive chairman Tony Sage said: “We are pleased to have this option to grow our exposure to JWD. "The project is shaping up well and this structure should allow us to see the project move into production before we need to exercise the option, providing us with valuable insight to guide our decision.” Purchase consideration If FEL elects to exercise the option it will be required to pay a total purchase consideration, including the deposit, of A$2.5 million. This payment can occur in cash or shares at FEL’s election and if FEL elects not to exercise, the deposit is repayable to FEL within 10 days of the end of the option period. Any share-based consideration will be determined based on the VWAP of FEL shares for the 10 trading days prior to the payment of the deposit. READ: Fe Limited ramps up development at near-production JWD Project in strong iron ore market Development ramping up Development activities at JWD are ramping up with mining contractor Big Yellow undertaking earthworks on-site and mobilising all mining fleet. FEL is working with Big Yellow to finalise the next scope of works to keep the project on schedule in advance of the commencement of full mining operations. Despite competitive market conditions, the company continues to attract experienced iron ore personnel to join its team with a new registered mine manager in Richard Kerrison and commercial manager Alan Jepson. Renegotiated terms The company has also this month renegotiated the September 2020 Mining Rights Agreement with GWR. Changes have extended the Stage 1 timeline and simplified administrative and cashflow requirements. One of the key changes has been to adjust the methodology by which royalty and rehabilitation obligations are funded - assisting FEL’s working capital during ramp-up. FEL has also agreed to guarantee its subsidiary company’s obligations to GWR as part of these changes. In addition, the timeframe by which FEL has to extract the first 300,000 tonnes of ore has been extended from October 2021 to January 2022, providing additional operational flexibility to FEL. “Timing couldn’t be better” At the time, Sage said: “It’s great to see work continuing at JWD and with the iron ore market as strong as ever at present, the timing couldn’t be better. “In spite of a competitive market for people, we are continuing to attract high-quality mining professionals to our team. “We are pleased to have been able to agree some common-sense modifications to the JWD mining rights agreements and thank GWR for their assistance in doing so. “We look forward to creating value for both sets of shareholders.” GWR chairman Gary Lyons said: “We feel the re-negotiated terms are a positive step for GWR shareholders and will facilitate the expediting of mining operations at JWD.”