Fe Limited (ASX:FEL) is a step closer to receiving $7 million for the sale of its Evanston iron ore royalty interest after buyer Trident Resources PLC (LSE:TRR) received approval from the Foreign Investment Review Board of Australia (FIRB).
The only remaining condition to complete the transaction is Trident listing on AIM, which is targeted to occur next week.
Sale of the royalty, which covers a portion of the Koolyanobbing Iron Ore Mine in Western Australia was overwhelmingly approved by FEL shareholders at an extraordinary general meeting.
This sale provides certainty for FEL’s financing position as the royalty stream is variable and depends on a range of factors such as the iron ore price, currency and production rates over which FEL has no control.
The Evanston royalty has seen FEL receive $1.829 million in the last 12 months from the sale of 1.228 million tonnes following the recommissioning of the mine in December 2018.
A sale and purchase agreement with TRR Services Australia Pty Ltd, a subsidiary of Trident Resources, provides for cash consideration to be paid in two instalments.
The first $4 million is payable upon completion of the transaction and the remainder is payable one day after the first anniversary of completion.
Funds to support exploration
Funds from the sale will provide FEL with the necessary funding to support ongoing exploration programs.
This includes follow-up works to the drilling completed earlier this year at the Hillside Gold and Copper Project in the Pilbara region of Western Australia.
Results from the first phase drilling were very encouraging with three holes positively identified to have intercepted down-dip extensions of a surface gossan.
The three identified holes showed anomalous intercepts spanning the full length of the 14-kilometre strike.
Fe Limited has entered into an earn-in agreement with Macarthur Minerals Limited (ASX:MIO) (CVE:MMS) for eight tenements in the Pilbara, including Hillside.