Trafford Resources (ASX: TRF) has signed a letter agreement with Independence Group NL (ASX: IGO) for a joint venture allowing Trafford can earn up to 80% of the iron ore rights in two Mid-West located projects.
The projects are known as Twin Peaks and Moorarie, and are located northwest of Geraldton - in the proximity of Jack Hills.
Twin Peaks project covers over 20 kilometres of a highly prospective, north-south striking, Banded Iron Formation belt, which can be considered prospective as these belts in the Mid-West contain iron ore deposits such as Jack Hills, Weld Range and Tallering Peaks.
Where the story becomes even more interesting is that no drilling for iron ore has been undertaken on the Twin Peaks tenements and only minimal drilling targeting iron ore has been completed on the Moorarie tenements.
However, recent exploration programs of aeromagnetics, ground gravity and rock chip sampling have been completed over the entire belt identifying large direct shipping ore potential.
The Moorarie Iron Ore Project is 40 kilometres northeast of the Jack Hills Iron Ore mine and infrastructure, currently being developed by Mitsubishi Corporation.
To earn 80% the terms include:
1. Complete 5000 metres of drilling within 12 months;
2. Trafford may earn 51% of the iron ore rights by spending A$2 million over two years
(inclusive of the 5000 metres of committed drilling in year one);
3. Trafford may earn an additional 29% in the project by spending a further A$3million
over an additional 3 years;
4. Upon Trafford earning 80%, Independence will have the option to contribute to the
Joint Venture or convert its remaining 20% equity to a 1.5% gross revenue royalty on all iron ore produced from the JV projects; and
5. Trafford will manage the Joint Venture.