Mindax Limited (ASX: MDX) has moved closer to progressing the Western Australia based Mt Forrest Iron Project through feasibility with a view to mining at the end of 2014, following the advancement of joint venture discussions.
The Hong Kong based Perpetual Mining Holding Limited (PMHL) have issued a preliminary notice of their intention to proceed with the joint venture, with the PMHL board formally issuing its approval.
PMHL has significant business connections within China, which includes detailed experience with iron ore production and within the iron ore industry in general.
The Transaction remains subject to negotiation and execution of a binding formal joint venture agreement as well as any statutory approvals required to proceed with the strategic partnership.
Mindax said that the Joint Venture Agreement negotiations will now commence based upon the Memorandum of Understanding previously agreed.
The Memorandum of Understanding was signed by the parties in March to cover the terms in which PMHL will acquire up to 51% interest in the project's DSO rights and up to 49% in the project's magnetite rights.
PMHL will spend up to $52 million by way of farm-in to fast track the development of the project. During the due diligence period, PMHL agreed to pay Mindax $250,000 per month.
New Mt Forrest drilling targets increase in iron base
Last month Mindax commenced second phase drilling at Mt Forrest which will cover around 400 metres, in a move to increase both the mining output and project life by increasing the iron inventory.
This work is part of Mindax's program to optimise the previously completed DSO Regolith Scoping Study, with the aim to increase the scale of both the mining output and project life by increasing the iron inventory.
Preliminary assessments indicate the distinct possibility of being able to include detrital material as part of the iron inventory.
With PMHL issuing a preliminary notice of their intention to proceed with the joint venture, Mindax is another step closer to commercialising Mt Forrest and achieving the goal of mining at the project by the end of 2014. This would be a value enhancing milestone for Mindax.
There is also the potential to increase the Mt Forrest resource base - which could also extend the mine life - with the company commencing second phase drilling last month.
Mt Forrest already hosts 1.7 billion tonnes at 31.8% iron, and additional resources would be a major advantage in finalising an agreement with PMHL.
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