PERTH (miningweekly.com) – Iron-ore developer Mindax’s Mt Forrest project, in Western Australia, has been fast-tracked for development after the company signed a A$52-million agreement with Hong Kong’s Perpetual Mining Holding Limited (PMHL).

Under the terms of a memorandum of understanding (MoU), PMHL would acquire up to a 51% interest in the direct shipping ore (DSO) rights of the Mt Forrest project, and up to 49% of the project’s magnetite rights by spending A$52-million.

The investment firm would acquire its first 20% interest in the DSO and magnetite rights by spending up to A$17-million to assess the feasibility of the DSO component of the project.

During the development stage of the DSO component, PMHL could acquire the balance of its interest in the DSO and magnetite rights by spending a further A$35-million to develop the DSO component of the project.

A previously completed scoping study had suggested that the Mt Forrest project could deliver some 1.3-million tons a year of DSO product over a life-of-mine of seven years, along with some ten-million tons a year of magnetite product, over an 18-year mine life.

Mindax was hoping to produce its first DSO material in 2014, with first sales targeted for the end of that same year.

Meanwhile, PMHL had also been granted exclusivity to undertake a due diligence in the period to decide whether to proceed with the transaction, which was anticipated to take some two months to complete. In consideration for this due diligence, PMHL had agreed to pay A$250 000 a month during this period.

“We are delighted with this proposed strategic partnership with PMHL,” said Mindax MD and CEO Steve Ward.

“Mindax is looking forward to working with PMHL to unlock the value of the Mt Forrest iron project for Mindax and PMHL shareholders. It allows a logical and manageable incremental development of a major iron-ore project in the Yilgarn iron province, with a long life.”

Ward said an investment by PMHL would allow Mindax to drive forward the Mt Forrest project with speed, which emphasised the urgency and importance of upgrading the logistics infrastructure in the Goldfields-Esperance region, including the rail network and the Esperance port.

“The proposed transaction represents a major step in the evolution of Mindax from an explorer to mining house,” he added.

Subject to the due diligence findings, the parties would enter into binding joint venture documents, which would be conditional upon board, shareholder and statutory approvals.