Sipa sells Mid West licence to Sinosteel

West Perth-based Sipa Resources has agreed to sell a small exploration licence in the Mid West to Sinosteel Midwest Corporation for $450,000.

Sipa will also receive a 0.2 per cent free on board royalty for any iron ore production from the E20/546 licence, located on the southwest end of the Weld Range area.

The licence, considered a non-core asset for Sipa, is adjacent to several properties currently held by Sinosteel.

The agreement is conditional on approval from the Foreign Investment Review Board as well as shareholder approval.

Sipa said it expects the agreement to be completed by the end of the year.

The funds will be used for working capital.

Sinosteel was formed in July last year after Sinosteel took over iron ore miner Midwest Corporation for $1.36 billion.

It was the first time that a Chinese state-backed group had gained control of an Australian resources company.