Gavin Fletcher, ex-principal process engineer for Fortescue Metals Group (ASX: FMG), and John Blanning, former vice president mining for African Minerals, head a team of iron ore project experienced personnel that approached Magnetic to work on the project.
The group has significant skills in the identification and definition of iron ore deposits, the conducting of metallurgical testwork and commissioning of iron ore operations.
The team offered to work beside Magnetic's current exploration team and Board to assist in defining a JORC Resource, the direction of metallurgical test work, flowsheet development, technical marketing and technical support through to and including project financing.
George Sakalidis, managing director, said the belief in the project together with the commitment by this group of industry experienced executives provides Magnetic with a cash injection to fund further exploration.
"But, more importantly, it provides the company with access to significant experience in the identification, definition and processing of iron ore, along with the necessary mining experience to commercialise any resource."
Significant iron ore experience
Fletcher is a metallurgist with 16 years' experience in mining in Australia, Africa and Europe.
He has held senior positions in both major and junior mining companies with the majority of his experience gained in aggressive start up projects in iron ore, gold and diamonds.
His experience covers all aspects of metallurgy and project development from initial assessment of a deposit, through to testwork, flowsheet development, project management and technical marketing of products to customers and investors.
His experience in the processing of magnetite will assist Magnetic, with Fletcher previously holding the roles of commissioning manager, process manager and project manager for the process optimisation of the Sydvaranger Magnetite Project in Norway.
Recent roles have also included general manager of processing and metallurgy for UK-listed African Minerals, commissioning and project manager for Northern Iron and principal process engineer for Fortescue Metals Group.
Meanwhile, Blanning is a civil engineer with over 30 years of mining, construction and business management experience in both iron ore and coal.
He has served as vice president mining for AIM-listed African Minerals, which discovered, developed, financed and established a fully integrated, iron ore mine, rail and port operation in Sierra Leone.
Blanning joined African Minerals in March 2009, when its market cap was around £30 million and was directly involved in growing the company to over £2 billion within the next two years.
He was directly involved in numerous capital raisings including the raising of $US750 million and the sale of 12.5% of African Minerals to China Rail & Materials.
As vice president mining, Blanning was responsible for all the development and operational aspects for the Tonkolili Iron Ore Mine, including the design, planning and scheduling for all mining operations.
Prior to joining African Minerals, Blanning was head of mining for Fortescue Metals Group, which also established a fully integrated mine, port and rail system in the Pilbara region of Western Australia, becoming the third largest iron ore producer in Australia.
The offer was conditional on the group securing access to a significant equity stake in Magnetic via a placement agreement.
Under the agreement, the group will provide an initial investment of $400,000 within three days of the mobilisation of the drill rig to the Ragged Rock Project.
Subject to the completion of satisfactory drilling during the two months following mobilisation, the group has agreed to a further three equal subscriptions of $200,000 at the end of every month.
The first $400,000 will be at the issue price of $0.07 per share.
The issue price for each subsequent subscription shall be equal to the lower of $0.10 per share or 70% of the volume weighted average price during the 20 trading days before the subscription date provided that this price is no lower than $0.07 per share.
Upon the initial $400,000 subscription, Magnetic will also issue 2.8 million options exercisable at A$0.1499 on or before 27 December 2016 and 1.2 million partly paid shares.
A further 1.4 million options and 600,000 partly paid shares will be issued with each subsequent subscription of $200,000.
Upon the initial subscription of $400,000, Fletcher will be appointed as an executive director of Magnetic and Ben Donovan, also a member of the group, will be appointed as company secretary.
Blanning will be employed on a consultancy basis to provide input into the mine development, transport and logistics routes ahead of the start of mining.
At Ragged Rock, a total of 12 magnetic targets have been identified over a cumulative strike of 41 kilometres within 15 kilometres of the rail infrastructure to Albany with likely port access.
Initial field trips identified outcropping very coarse grained magnetite at eight of the targets, of which six have been subjected to industry standard Davis Tube Recovery (DTR) test work.
The DTR results indicate a good grade, low impurity product can be achieved. The overall grade for all grind sizes is 68.56% Fe, 1.81% Si02, 0.92% AL203 and 0.02% P.
Coarser grind test work demonstrated similar high grade iron/low silica, as well as low impurities, recovery characteristics as the finer grind fractions, suggesting potential to substantially reduce both CAPEX and OPEX.
Sakalidis said: "I think substantially better economic results can potentially be achieved because the assumed grind size in the study was 75 microns whereas a larger grind size is thought quite likely to be achievable."
If drilling demonstrates a deposit, even of modest scale, and test work demonstrates that low impurity, low silica high grade coarse magnetite can be recovered from the targeted material, then the CAPEX requirement may be materially lower than that estimated in the economic study.
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