Radar Iron (ASX: RAD) may trade firmer after purchasing a large iron ore tenement holding in Western Australia from Cliffs Magnetite Holdings and its joint venture partners, Sojitz Mineral Development, and Nippon Steel.
The project area contains a major deposit within 150 kilometres of Perth and adjacent to rail, fitting Radar’s strategy of acquiring projects that can be brought into production in the near term for low capital cost.
Radar's new landholdings cover 501 square kilometres and include the Yerecoin Project which holds a JORC Inferred resource of 404 million tonnes of iron.
Yerecoin ores require only a coarse grind, and simple processing produces a concentrate grade of over 68% iron with (>68% with low impurities.
Notably, Radar has raised $860,000 at $0.05 per share to Resource Development Group (ASX: RDG).
This is a substantial premium to Radar's last traded share price of $0.03, and RDG is the owner of project delivery company Engenium which has carried out engineering studies on the project.
These studies by RDG's subsidiary indicated potential economic viability and expected low capital cost; presumably the basis of their investment decision.
Consideration for the acquisition entails $860,000 on signing the agreement, $1.44 million by November 30th 2014; $1.44 million by April 17, 2015, and a royalty of $1 per dry tonne of concentrate.
Radar will complete sufficient studies in coming months to demonstrate Stage 1 development economics, concurrently with work to obtain development approvals and finalise the optimal transport network.
The company is currently capitalised at around $3 million.
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