Pilbara-focused minerals outfit Fox Resources has signed a joint venture agreement with Breeton for its Mt Oscar project.
Pilbara-focused minerals outfit Fox Resources has signed a joint venture agreement with Breeton for its Mt Oscar project.
Queensland mining investor Sam Chong is associated with Breeton which will earn a 60 per cent interest in Mt Oscar by making several staged investments in the project up to $28 million.
Under the agreement Mr Chong will take a 10.6 per cent stake in Fox making him the company's second largest shareholder.
"We are extremely pleased to be able to announce this agreement with Breeton and the immediate value creation from such an exciting project," said Fox Resources' chairman Terry Streeter.
"This transaction will provide capital to execute a more aggressive development drilling program at the Mt Oscar project," he said.
See full company statement below:
Fox Resources (ASX: FXR, Fox) today announced that Breeton Pty Ltd (Breeton) has accepted a proposal from Fox to establish a joint venture (JV) covering the development and operation of the Company's Mt Oscar Magnetite Project (Mt Oscar, the Project).
Under the terms of the proposal, Breeton will earn a 60% interest in the Project (for iron-ore rights only) by making an up-front payment of $3 million and providing $20 million on an earn-in basis through sole funding of ongoing development work of the Project over the next five years. The proposal is conditional upon Fox and Breeton finalising a formal JV and farm-in agreement.
In addition, Breeton has also entered into a subscription agreement with Fox to subscribe for 33,782,762 fully paid ordinary shares in Fox at a price of 15 cents per share together with 1 free attaching option per share exercisable at 30 cents each on or before 31 March 2011 (ASX: FXROA).
The proceeds of approximately $5.07 million from the issue of the shares are intended to be used to further advance Fox's heap leaching project, continue exploration to define further base metal resources and mine life for the heap leaching project, to provide working capital and to pay costs of the offer.
The shares and options to be issued to Breeton comprise the shortfall from Fox's entitlement offer conducted in May 2010 and will be issued on the terms outlined in the prospectus for that offer issued by Fox dated 22 April 2010 and released to ASX.
Fox Resources' Chairman, Mr Terry Streeter, commented, "We are extremely pleased to be able to announce this agreement with Breeton and the immediate value creation from such an exciting project. This transaction will provide capital to execute a more aggressive development drilling program at the Mt Oscar project. Mr Chong brings development experience and valuable connections to the Steel industry in China. We look forward to working closely with them as we set our development plan in action.
"It has been a very comprehensive search to find the right partner for Mt Oscar and the best transaction for our shareholders - and we are very pleased with this outcome."
Mr Chong is a private mining investor based in Brisbane, Queensland active in the resources sector.
He has participated in the development and operation of several successful coal mines in
Queensland.
Mt Oscar (EL 47/1217), located 25km south of the iron ore Port of Cape Lambert, has initial Inferred resource of 72Mt grading 34% Fe. In June 2009, Mineral Engineering Technical Services Pty Ltd (METS) completed a scoping study confirming the Project's great potential for success and unique advantages in its location.
Upon issue of the shortfall shares Mr Chong will become the second largest shareholder in Fox, with a shareholding representing 10.6% of Fox's share capital.
The issue of the shares and options will occur on or before 26 August 2010. Shareholder approval is not required for the issue as the directors reserved the right for Fox to issue the shortfall shares and options at their discretion as set out in section 2.4 of the prospectus for the entitlement offer.
