Following completion of due diligence, Eastern Iron (ASX: EFE) has signed the sale and purchase agreement with RMM Capital Pty Ltd for the Eulogie Iron Project.
The agreement is now subject only to approval by the Queensland Government for the transfer of the related project tenement.
Eastern Iron will issue 2,500,000 shares to RMM Capital, or its nominee, upon receipt of the Queensland Government approval.
There remains an overriding 2.5% gross proceeds royalty on production from tenement which is payable to the original vendors of the property.
The acquisition is a valuable addition to the company’s growing portfolio of quality iron ore prospects within its Central Queensland Iron Project.
The Eulogie project is located 23km south of Mount Morgan in Central Queensland, close to world class bulk tonnage infrastructure, including sealed roads and the main Moura – Gladstone railway line.
Importantly, the railway is part of the Central Queensland coal network leading to the expanding deepwater export port of Gladstone.
The geology and nature of the ferrigabbro layers is almost identical to that at Eastern Irons' Hawkwood iron project, located 220km to the south.
Eastern Iron believes there is potential to prepare a JORC resource estimate, as well as investigating the exploration upside within areas untested by previous explorer, Theiss Contractors Pty Ltd.
The company plans to carry out further resource drilling and metallurgical studies in 2011 and will assist Eastern in assessing the potential to develop a large scale iron export operation.