Fenix Resources Ltd (ASX:FEX) has entered into a binding term sheet for a farm-in and joint venture agreement with Scorpion Minerals Ltd (ASX:SCN) for two tenements E20/953 and E20/948, totalling 384 square kilometres, adjacent and contiguous to Fenix’s recently commissioned Iron Ridge Project.
The binding term sheet provides for Fenix to undertake exploration activities for iron ore, whilst leaving Scorpion to focus on its gold and PGE nickel-copper targets within the tenements.
Fenix can earn 70% of the iron ore rights by sole funding exploration and resource definition drilling to identify up to 10 million tonnes.
Alternatively, Fenix can earn 70% of a portion of the tenements by funding a feasibility study on a resource of at least 1 million tonnes of iron ore.
"Excited by opportunity"
Fenix managing director Rob Brierley said: “Fenix is excited by the opportunity to increase its landholding and, potentially, its iron ore resource to further benefit from the regional infrastructure, ore transport and port facilities already established for the Iron Ridge Project.”
In addition, Scorpion has agreed with Fenix that it can utilise its camp at Iron Ridge to support ongoing exploration activities in the region.
Mining operations at Iron Ridge
Scorpion Minerals director Bronwyn Barnes said: “Scorpion is very pleased to have completed this binding term sheet with Fenix for iron ore exploration on these tenements.
“With Fenix recently commencing mining operations at their high-grade Iron Ridge Project, this joint venture gives Scorpion exposure to the iron ore potential of its tenements whilst we continue to focus our exploration activities on the tenements gold and PGE-nickel-copper targets.”
Tenement E20/953 is the subject of an option to acquire between Scorpion and Element 25 Ltd (ASX:E25) (FRA:QFP) while tenement E20/948 is 100%-owned by Scorpion.
The two tenements have iron ore targets totalling 15 strike kilometres already identified.
Terms of deal
The material terms of the term sheet are:
- Scorpion grants to Fenix the right to earn a 70% interest in the iron ore rights, in the tenements during the farm-in period of four years; and
- for the remainder of the farm-in period, Scorpion grants to Fenix the sole and exclusive right to carry out exploration for iron ore on the tenements for the purpose of exercising the iron ore rights as required to satisfy the farm-in requirements.
During the farm-in period and, if Fenix satisfies the farm-in requirements during the farm-in period, during the continuance of the joint venture, Scorpion agrees that it will not exercise the iron ore rights in respect of the tenements:
➢ Subject to paragraph (b), to earn a 70% interest in the iron ore project, Fenix must fund all drilling up to 10,000,000 tonnes of iron ore JORC-compliant mineral resources;
➢ Notwithstanding paragraph (a), if at any time during the farm-in period, Fenix completes resource definition drilling and a feasibility study on a minimum 1,000,000 tonne iron ore deposit (development deposit), Fenix may, by notice in writing to Scorpion:
- Elect to treat the development deposit as a stand-alone iron ore project (development project); and
- Delineate a mining area within the tenements (covering the development deposit and such other areas as are reasonably sufficient for the conduct of the proposed mining operation; in which event:
- Fenix will be deemed to have satisfied the farm-in requirements in respect of the development project and the development area, and to have earned a 70% interest in the development project; and
- Fenix and Scorpion will be deemed to have established the joint venture in respect of the development project. For the avoidance of doubt, if at any time during the farm-in period, Fenix establishes any further development area, that development area will form part of the same joint venture and any and all such development areas will form part of the same joint venture upon satisfaction of the full farm-in requirements under paragraph (a).
➢ Upon satisfaction of the farm-in requirements during the farm-in period, Fenix will be deemed to have earned a 70% interest in the iron ore project, and Fenix and Scorpion will be deemed to have formed a joint venture in respect of the iron ore rights and the iron ore project in their respective percentage interests from time to time (the joint venture).
➢ If Fenix fails to complete the farm-in requirements prior to the expiry of the four-year farm-in period, Fenix will be deemed to have surrendered its right to earn an interest in the iron ore project (other than any existing development project).
Fenix may withdraw from the terms sheet at any time prior to the expiry of the farm-in period provided that it has expended not less than $350,000 on exploration expenditure on the tenements at the time of withdrawal.