Macarthur Minerals (ASX: MIO) has agreed to sell Gold Valley Yilgarn the rights to mine and develop its stranded Lake Giles Ularring iron ore project in Western Australia’s Yilgarn region in a deal that could yield tens of millions of dollars.
The deal involves payments totalling $750,000 by December and a royalty over the extraction of the ore that could push the value of the agreement up to more than $89 million for Macarthur. The royalty deal will net the company $10 million dollars for the first 2 million tonnes of ore Gold Valley ships to the Esperance port from the 80.5 million-tonne project and $1 for every subsequent tonne.
While Macarthur will retain ownership of the Ularring project tenements, selling the mining rights will give it the financial impetus to be able to focus further on its 1.3 billion-tonne Lake Giles Moonshine magnetite project that lies right next door.
As part of the life-of-mine agreement, Gold Valley will be required to maintain the tenements in good standing, pay all State Government royalties and secure all necessary approvals required before it begins mining.
This milestone marks a significant initial stride in advancing our valuable iron ore assets in Western Australia into production. It represents a pivotal step for Macarthur, bolstering the financial sustainability of our operations throughout the mine’s lifespan as we progress towards bringing our much larger, 1.3 billion-tonne Moonshine Magnetite Iron Project to market.
Macarthur Minerals chairman Cameron McCall
McCall said the deal would effectively derisk the financial viability of the company for the life of the Ularring mine. He said it signified the first phase of a “multi-stage, multi-generational green iron ore initiative”.
Gold Valley – a West Perth-based miner privately-owned by Chinese-born businessman Yuzheng Xie – has been making waves in the WA iron ore sector of late, locking in two iron ore projects in the past six months. The company is just the second iron ore exporter at the Esperance port, joining WA mining giant Mineral Resources.
Gold Valley intends to develop the Ularring project to blend product with the crushed ore from its high-grade, 130 million-tonne Wiluna West mine it bought from GWR Group last year. The “unique blend” of hematite iron ore, which is expected to attract healthy premiums from select steel manufacturers, will be trucked to Kalgoorlie before being railed to the port on trains operated by Australia’s biggest rail freight operator, Aurizon.
The latest muscling in on MinRes’ Esperance port turf will allow Gold Valley to ship up to 3 million tonnes of iron ore a year. About 1.5 million tonnes of product is expected to soon pass through Esperance following a ramp-up scheduled to kick off in September.
The company, which also has interests in the agriculture and energy sectors, currently ships ore to seven countries, including several in Europe, and is recognised internationally as a green iron ore producer.
And Gold Valley’s obvious want to expand will subsequently allow Macarthur to breathe new life into its Moonshine magnetite mission.
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