PERTH (miningweekly.com) – Metals developer Centrex Metals and its joint venture (JV) partner Wuhan Iron & Steel Group (Wisco) have amended their JV terms over the Fusion magnetite project, in South Australia.

In September, the JV partners delayed the development of the Fusion project, citing the changing market conditions. Instead, the companies agreed to start an exploration programme at new deposits within the Fusion tenement package, to allow greater mining selectivity and to reduce the estimated mine production costs.

Centrex said on Monday that a new deed signed between the JV parties would see the Fusion project move back into a prefeasibility stage over the next 12 to 24 months to assess the expanded project.

The company said that a major goal to negotiate the amendments to the current JV was also to find a funding solution through to the end of a bankable feasibility study (BFS) for Fusion, which was isolated from Centrex’s current cash reserves.

On the completion of the PFS, the JV would either be incorporated into a spin-off vehicle with a separate listing, which would raise the funds for the completion of a BFS, and would result in Centrex’s share being diluted to less than 30% of the spin-off vehicle, or the JV partners could work together to bring a third-party funder into the JV, which again would dilute Centrex’s share to no less than 30%.

In return for the new funding path, Centrex has relinquished its entitlement to any resource incentive payments under the original agreement. These entitlement payments represented four potential tranches of A$27-million each, depending on the size of the defined inferred resource.

Centrex said that given the uncertainty over triggering the resource incentive payments, with the JV still quite some time from its first milestone mark and land access constraints in the area, the company believed the priority at Fusion was for a BFS path that was isolated from the company’s cash reserves.

The new deed also provided that if Wisco did not wish to proceed with the project after the completion of the PFS, the two JV partners would work together to conduct a trade sale.

This provision would also apply if either of the two BFS funding options were not completed within 12 months of the PFS being completed.