PERTH (miningweekly.com)− Diversified major Anglo American has agreed to join the Earaheedy iron-ore joint venture (JV) and could earn a 75% interest in the Western Australian project.
The Earaheedy JV between Vector and Cazaly covers an area in excess of 1 700 km2, including a substantial strike extent of the iron-ore prospective Frere Formation.
Under the farm-in agreement, Anglo American would be allowed to complete an initial proof of concept programme over a 890 km2 area, with a minimum of 7 500 m of reverse circulation or diamond drilling to be completed as due diligence, within 18 months.
Following this, the diversified miner could earn an initial 51% interest in the project by paying an initial $1-million in cash to the JV parties, and spending $20-million within a four-year period.
Anglo American could then earn a total of 75% interest in the project by completing a bankable feasibility study, and paying a further $5-million to the JV partners.
Additionally, and following the delivery of a positive bankable feasibility study, a success payment of $45-million would become payable by Anglo American to the JV partners, who could then elect to contribute to the project expenditure, or to dilute their interest to a royalty of 1.25% free-on-board.
Cazaly MD Clive Jones said on Monday that the agreement with Anglo American recognised the potential of the Earaheedy project, and the need to have a major international mining house as part of its development.
“Earaheedy is a potentially major iron-ore province and it needs the resources and expertise of a major player to develop it. Anglo American has the resources to invest in the development of this project and we, and our JV partner, are very happy to have their support,” said Jones.
Anglo American expects to nearly double its iron-ore production to 80-million tons by 2014. It holds a 63.5% stake in South Africa’s Kumba Iron Ore and owns Minas-Rio in Brazil.