Dragon Energy acquires iron ore projects in Western Australia

Friday, December 04, 2009

Dragon Energy (ASX: DLE) has snapped up three West Australian iron ore projects from Polaris Metals (ASX: POL) as part of its iron ore and coal growth strategy.

The projects comprise 7 tenements totalling 596 km² in size and have sound potential to host large scale hematite and magnetite iron ore deposits.

The Pilbara Ashburton project is close to existing operating iron ore mines and has a “detrital iron target potential in the range 600Mt to 1200Mt”.

The Midwest Milly Milly project has potential to host significant Jack Hills style high quality magnetite iron ore deposit. The project is also prospective for chromite mineralisation.

The Lee Steere Range project contains a 47 km strike length of favourable iron rich lithology with up to 66% Fe rock chip samples being reported. Dragon’s exploration focus will be on significant hematite/goethite and magnetite iron ores.

The tenements are also prospective for calcrete hosted uranium mineralisation.

The major acquisition terms for the three projects includes aggregate cash payment of $450K, acquiring 100% of Ashburton and 100% of Milly Milly, acquiring 75% of iron ore rights and 100% other mineral rights for Lee Steere, Dragon to sole fund the first $1M of iron ore exploration expenditure on Lee Steere and Polaris retains a royalty right of $1.00 per tonne of iron ore mined, capped at $10M aggregate for all three projects.

Dragon will have 6 iron ore exploration projects consisting of 7 granted licences and 3 applications in Western Australia totalling 958Km² in size, and will deploy significant resources in a short time frame to fully test the potential of these projects. Dragon will continue to pursue suitable project acquisitions and farm‐in opportunities in Australia with a principal focus on bulk commodities iron ore and coal.

Dragon Chairman Jie Chen said the move was an important strategic step for Dragon, its major shareholder the Shandong Taishan Sunlight Group.

The Shandong Group is a leading Chinese coal mining group with a world‐class safety record and exceptional business credentials.

The listing of Dragon Energy on the Australian Securities Exchange (ASX) in February 2009 was facilitated by a cornerstone investor, the China‐based Shandong Taishan Sunlight Group Company.

Shandong Group controls 1.5 billion tonnes of coal and 100 million tonnes of iron ore resources in China as well as engaging in steel making and power generation. Shandong Group, essentially a private enterprise, will avail direct and indirect financial capacity and funding capability, wide industry connections, and mining know how, to underpin plans for Dragon Energy’s growth and pursuit of suitable mine projects world‐wide.

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