JOHANNESBURG (miningweekly.com) – Dual-listed Beacon Hill Resources’ subsidiary BHR Investments has entered into an agreement with Acácia Mineração to acquire up to a 70% stake in a prospecting and exploration licence that has “strong potential” for pig iron mineralisation, in Mozambique’s Tete province.

"Following many months of due diligence, we are confident that Licence 3788L represents a significant potential pig iron opportunity and that this transaction provides us with an ideal, low-cost opportunity to vertically integrate our portfolio and broaden our exposure to a broader group of steel-related commodities.

“Maintaining low costs is very important to us and of particular importance is both the project's close proximity to our existing Minas Moatize project, which will enable us to [use] existing infrastructure and personnel, and the implications of our proposed cogeneration project on processing costs. We will now proceed to complete our sampling work to understand the size of the deposit better and look forward to providing updates at the appropriate time,” Beacon Hill CEO Rowan Karstel said in a statement to shareholders on Wednesday.

The company added that, in addition to pig iron, the project could also be a potential source of magnetite, which is used by BHR in its coal washing process.

Under the terms of the agreement, the licence would be transferred to a newly incorporated entity, or special purpose vehicle (SPV), after mining licences have been granted for aggregates and magnetite for coal washing projects. 

BHR would start sampling work to determine the prospectivity of the licence area and to define an exploration programme. It would need to invest $200 000 or more into the project within 12 months to earn a 20% interest in the SPV, with Acacia to hold the balance.

Thereafter, BHR would be entitled to earn an aggregate 51% interest in the SPV by funding the completion of a Joint Ore Reserves Committee-compliant inferred resource for the project within 36 months or to earn an aggregate 70% interest in the SPV by funding the completion of a definitive feasibility study for the project within 48 months.