Magnum Mining and Exploration (ASX: MGU) has exercised an option to acquire an iron ore project in Brazil, strategically located in the well-known “Iron Quadrangle”.
Magnum held an exclusive option to acquire all of the shares in Irongates (Aust), which holds 99% of Brasil Recursos Minerais – which in turn has contractual rights to acquire Emicon Mineracao Terraplenagem’s iron ore project in Brazil, known as the Brazilian Iron Ore Project.
The project is strategically located in one of the most important metallogenic provinces in the world and has been mined for iron ore since the nineteenth century.
Importantly, the Brazilian Iron Ore Project consists of an in situ exploration project and a sinter feed project containing alluvial tailings, with the fines providing an early production opportunity.
Both the Brazilian Iron Ore Project and Sinter Feed Project areas are located less than 20 kilometres from Brazil’s MRS railway network, providing infrastructure logistics to transport iron ore to major ports located off the coast of Rio de Janeiro and São Paulo.
Formal agreement
To cement the acquisition Magnum will pay US$1 million within seven days of the date of settlement of the acquisition.
Further milestone payments will also be paid, including $20 million on the definition of a Measured and Indicated JORC Resource.
Magnum will make two further payments of $15 million each upon the completion of a Bankable Feasibility Study and the achievement of 1 million tonnes per annum of production.
A quarterly royalty payment of US$3 per tonne of iron ore is also a condition of the agreement.