JOHANNESBURG (miningweekly.com) – The first phase of a bankable feasibility study (BFS) into triple-listed iron-ore explorer Ferrum Crescent’s Moonlight iron-ore project, in Limpopo, will start in the fourth quarter.
This followed the signing of a farm-in and joint venture agreement with Business Venture Investments No. 1709 (BVI), which would fund the BFS in return for an up to 43% equity interest in the project’s holding company Ferrum Iron Ore (FIO).
The agreement effectively terminated a previous memorandum of understanding between Ferrum and Principle Monarch Investments, which would have acquired a 39% interest in FIO in return for funding the BFS.
“It has been a very long road in extremely difficult market conditions but, finally, we have a fully committed and binding agreement in place for completion of the Moonlight project BFS,” Ferrum MD Tom Revy pointed out.
The first phase would focus on updating and completing a study on the best short-term business case model, based on technical, financial and committed domestic offtake details.
The study was expected to be completed within 12 months, and would see BVI earn an initial 14% equity interest in FIO.
Ferrum would, however, be entitled to contribute R8.3-million to the Phase 1 BFS costs to reduce BVI’s equity interest to 10%.
The second phase, to be carried out over 24 months, would see the completion of a study on the best short-term case defined during the first phase of the BFS.
The second phase would include all matters required by international project and equity financiers, including certain detailed deliverables agreed with Ferrum Crescent.
Upon satisfactory completion, BVI would earn a further 29% equity interest in FIO, thereby equating to a potential interest of up to 43%.
Under the terms of the farm-in agreement, BVI would appoint the manager of the BFS, as long as the appointee was an internationally reputable engineering firm capable of managing the conduct and completion of the stipulated farm-in programme.
BVI and FIO would also form a management committee to establish and give direction to a team charged with the day-to-day management of the BFS studies.
FIO would retain the right to negotiate and conclude term sheets for the engineering, procurement and construction (EPC) contract from an engineering consulting firm to be recommended by BVI; negotiate an EPC management contract with Aurecon for project infrastructure; appoint an infrastructure financier if and when required in the future; and negotiate an EPC contract for the construction of a pelletising plant.