Aurumin has pocketed a cash boost of $500,000 for the sale to private company Newcam Minerals of an exclusive six-month option on the iron ore rights at its Central Sandstone gold project in WA. Newcam will conduct due diligence across the site that consists of three mining leases and it may lead to a JV agreement between the two parties, resulting in a further $500,000 payment.
Aurumin has pocketed a cash boost of $500,000 for the sale to private company Newcam Minerals of an exclusive six-month option on the iron ore rights at its Central Sandstone gold project in Western Australia’s Mid West region.
Newcam will conduct due diligence across the site and if it is satisfied with the exploration results from an agreed program decided upon by the two parties, it may exercise its right to earn a 50 per cent interest in the iron ore rights and lead to the establishment of a joint venture (JV) agreement with Aurumin.
If Newcam decides to exercise the option, it will result in a further $500,000 payment to Aurumin and the private company will also stump-up a $5 million loan to fund production start-up, with the money to be repaid from operating profit. Any additional payment received would provide valuable funding for Aurumin’s own exploration plans of hunting down more gold at Central Sandstone, which comprises an 881,300-ounce resource.
To add further spice for the company in the agreement, if a 2012 JORC-compliant resource is released for more than 3 million tonnes grading an average 60 per cent iron, Newcam will pump a further $1 million into the goldie’s bank account.
The two firms plan to contribute 50 per cent each of the agreed exploration costs incurred within the six-month period, with Aurumin also charged with the responsibility of covering any holding costs for its tenements prior to the option expiry period.
The company revealed in August that 19 samples were taken from its ground, consisting of three mining leases, for testing the iron-ore potential at the site.
A peak return of 67 per cent iron from the chips and the identification of banded-iron outcrops, potentially 5m to 40m wide across a non-continuous 6km strike of banded-iron material at surface, provided management with the confidence that there may be economic iron deposits contained within its ground. It believes the site is also prospective for direct shipping ore (DSO) iron ore material, after recent rock-chip sampling.
Newcam appears to share Aurumin’s enthusiasm for the iron potential at the gold project and an economic iron ore deposit could provide a game-changing outcome for the value of the project. The latter’s geophysical consultants have re-processed and interpreted historic datasets, providing improved visuals for the iron beds and assisting with the further targeting of gold and iron ore mineralisation.
Aurumin managing director Brad Valiukas said: “The iron ore at Sandstone is a bonus, and this potential joint venture with Newcam can accelerate our activity, reduce the need for funding and remove logistical hurdles for export, de-risking the project overall. Importantly for Aurumin shareholders, by joint venturing the iron ore we maintain far more upside and potential profit compared to a royalty-based transaction.”
Newcam is a private company with iron ore assets in WA’s Mid West. It mines, hauls and exports iron ore from Mt Gould through the Geraldton Port and recently purchased the JWD Wiluna assets from ASX-listed CuFe.
A major advantage for the company is that it has bulk storage capacity on a long-term lease at the Geraldton Port and access to ship loading and site-to-port haulage.
Aurumin’s decision to sell its iron ore rights is already proving to be rewarding and will enable it to focus on its flagship project at Central Sandstone. Its gold resource of 881,300 ounces consists of open-pittable material comprising 7.622 million tonnes at 1.3 grams per tonne gold for 307,400 ounces.
Additionally, its underground resource at the project consists of 18.45 million tonnes grading 1.5g/t gold for 573,900 ounces. The average grade across the project is 1.5g/t.
The company also has a 64,700-ounce gold resource grading 2.51g/t at its Johnson Range project, combining for a total resource of 946,000 ounces across its projects.
Aurumin’s shrewd business decision to sell half its iron ore rights and use the funds to kick its Sandstone resource towards the magical million-ounce mark appears to be a gold-plated move.
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