Eastern Iron (ASX: EFE) has been granted a two year option by Waygara Mines to acquire 100% of the Nowa Nowa iron project in eastern Victoria, with plans to define a resource estimate over coming months.
Eastern Iron acquired the two year option by paying Waygara $20,000, and can extend the time by 12 months through the payment of a further $40,000 to Waygara.
The option can be exercised at any time during the two year period through the payment of either $300,000 or $100,000 plus one million Eastern Iron shares to Waygara.
Once the option is exercised, Waygara will retain an overriding 1% gross proceeds royalty on production from the exploration licence.
The Nowa Nowa project area is located close to infrastructure, including a rail link from Melbourne to the major regional centre of Bairnsdale, 50 kilometres by sealed road.
Test drilling carried out in 1955 by the Victorian Mines department, centred on the Five Mile Deposit, indicated the occurrence of massive magnetite with lesser hematite 30-50 metres below tertiary sands and Devonian volcanic rocks.
Some exploratory drilling has also been conducted on nearby magnetic targets, including the Seven Mile, Six Mile and Three Mile deposits. Eastern Iron intends to explore these further to determine whether they contain additional resources.
Initially Eastern Iron will focus on recompiling the existing drill and assay data in order to recalculate a resource for the drilled areas and examine the possibility of using samples from the existing drill core to conduct some preliminary metallurgical testwork to determine the type and potential value of an iron product from these deposits.
The company plans to investigate the potential to develop a low capital cost operation producing high grade iron ore which could be cheaply beneficiated to a coarse, possibly lump, plus-65% iron product for export.