- Published: Monday, 24 May 2010 10:17
- Written by ASIA Miner News
An agreement between Lincoln Minerals and Jiangyin Huaxi Steel Co (JHS) will see the Chinese steel mill inject $8.25 million into the Australian-based company and purchase at least half of the proposed output from Lincoln’s Gum Flat Iron Ore Project in South Australia.
The Heads of Agreement will see JHS own about 13% of Lincoln shares, making it Lincoln’s second largest shareholder.
It will also result in Lincoln establishing an off-take agreement with JHS comprising 50% of Lincoln’s share of any future hematite direct shipping ore (DSO) and 50% of Lincoln’s share of any other hematite and/or magnetite iron ore production from the Gum Flat project on southern Eyre Peninsula.
Off-take shall begin from start-up of hematite DSO and/or magnetite production for a minimum period of 2 years, with JHS having the right to extend for a further 3 years.
Lincoln plans to use proceeds from the direct investment to regain 100% ownership of the project and fast track Gum Flat exploration and development to build on its existing indicated and inferred resources of 58 million tonnes and exploration targets of 125-200 million tonnes magnetite ore and 4-17 million tonnes of hematite ore.
Lincoln’s managing director John Parker says, “Lincoln will buy back from Indian iron ore miner, Mineral Enterprises Limited (MEL) and its subsidiary, Mineral Enterprises Australia, at a cost of Aus$5.7 million, the 40% of the Gum Flat project not already owned by Lincoln.
“In addition, Lincoln will also complete a scoping study at Gum Flat for both hematite DSO and magnetite mining and beneficiation, a detailed hydrogeological study and, subject to the outcomes of those studies, apply for a mining lease and seek all necessary approvals.”
Lincoln and MEL announced on March 12 this year that the two companies had signed a Contract for Sale of Joint Venture Interest under which, subject to finance, Lincoln will re-acquire the 40% interest in Gum Flat.
Lincoln originally entered into the joint venture agreement with MEL in December 2007. MEL advised Lincoln this year that as it is developing a number of projects in India, including a hematite beneficiation plant and a deep sea port, it has agreed to sell its interest in Gum Flat to help fund its Indian initiatives.