Jindalee Resources Ltd (ASX:JRL) has signed a binding term sheet with GWR Group (ASX:GWR) Ltd for the sale of a 70% interest in the Prospect Ridge Magnesite Project in Tasmania for A$1 million in cash and shares.
Under the deal, Jindalee will retain its 30% interest in the tenement on a free-carry basis until a decision to mine has been made.
The arrangement has seen Jindalee's shares rise by as much as 9% this morning to A$2.50 while the company's market cap is approximately A$127.14 million.
Terms of the deal
Under the deal, Jindalee, which holds a 100% beneficial interest in the project via wholly-owned subsidiary HiTec Minerals Pty Ltd will sell 70% of its interest to Tasmanian Magnesium Pty Ltd (TM), a wholly-owned subsidiary of GWR Group (ASX:GWR) for total consideration valued at A$1 million.
Key terms include:
➢ Total consideration of $1 million, comprising A$250,000 in cash and A$750,000 in GWR shares;
➢ HiTec’s 30% free-carried to decision to mine; and
➢ TM required to spend a minimum of A$2 million and complete a scoping study within five years or TM’s 70% reverts to HiTec and TM has no further interest in the project.
GWR to help develop project
As part of its decision to maintain focus on key assets which include the McDermitt Lithium Project in the US and the Widgiemooltha Nickel-Gold-Lithium Project in Western Australia, the company had been actively engaged with potential partners seeking to advance Prospect Ridge.
“GWR has established expertise in the mining and export of bulk commodities and Jindalee is pleased to introduce GWR as a partner to help develop the Project,” Jindalee said in the statement.
Potential for low capex DSO operation
In a separate statement, GWR chairman Gary Lyons said: “The GWR team has reviewed a number of projects to that will move the company into the 'green sector', and we believe the advanced Prospect Ridge Magnesite Project provides an excellent opportunity to enter the 'green' global magnesium market whilst enabling GWR to apply our experience in bulk commodity mining and tap into our network of offtake partners and end-users.
“The Prospect Ridge Magnesite Project has had a substantial amount of work undertaken, including diamond drilling, metallurgical test-work, environmental and Aboriginal heritage surveys and feasibility studies.
“We believe it may have the potential to be a low capex DSO operation, which is close to a significant deep-water port in Tasmania and the GWR team will be funded to accelerate the project with the aim of adding significant shareholder value.”
Prospect Ridge Project
The Prospect Ridge Project comprises both the Arthur River and Lyons River magnesite deposits.
The Arthur River deposit contains an inferred mineral resource of 25 million tonnes at 42.4% magnesium oxide at 40% magnesium oxide cut-off.
Lyons River deposit, 6.5 kilometres south along strike of the Arthur River deposit, has a conceptual exploration target range of 40-60 million tonnes at 40-44% magnesium oxide at a 40% magnesium oxide cut-off.