Fe Limited (ASX:FEL) (FRA:B4T) directors Mark Hancock and Tony Sage have provided strong validation of their confidence in the company’s two near-term iron ore production assets by each acquiring 2.5 million shares for a total value of $100,000.
The shares were purchased on the early exercising of unlisted options valued at 2 cents each.
Executive director Hancock now holds 2.5 million shares in an indirect interest.
Non-executive chairman Tony Sage has taken his overall holding to more than 11.673 million shares in two indirect interests.
Today the company’s securities have been up as much as 10% to a new two-year high of 3.5 cents.
Very high price environment
Sage said that buying the shares at this price “ is a steal given the company has two near-term iron ore production-ready assets in the current very iron ore high price environment”.
He said the value proposition was also strengthened by the fact that most of FEL’s junior iron ore peers are currently at least three times the market capitalisation of Fe Ltd of approximately $10.54 million.
The company is well-placed to benefit from strong iron ore market fundamentals, including increased demand and higher prices.
Near-term production assets
With more than $6 million in the bank, FEL is taking large strides with its plans to bring the recently acquired advanced JWD and Yarram projects to production in the near-term.
This includes building an experienced and focused management team to exploit the assets as quickly as possible.
FEL entered into a binding JV agreement to acquire 51% from Gold Valley Iron Ore (GV) of the Mining Rights Agreement it holds over the Wiluna West JWD iron ore deposit in WA, the underlying tenure for which is owned by GWR Group Ltd (ASX:GWR).
This deposit has a JORC 2004 estimate of 10.7 million tonnes at 63.7% iron and low impurities using a 55% iron cut-off, with 60% classified as a measured resource.
There has been significant development work completed, including resource optimisation, pit design and mine plan, with the majority of approvals in place including a Project Management Plan (PMP), which was approved in January 2020.
The Mining Rights Agreement requires a minimum of 300,000 tonnes to be mined and trucked from the tenement within 21 months of the PMP approval date.
As a result, FEL, which will operate the JV with its 51% stake, is targeting early-start operations to meet this date and take advantage of current prices.
FEL has also entered a binding conditional Heads of Agreement to acquire 50% of the Yarram Iron Ore Project in the Northern Territory, which is adjacent to existing underutilised mining infrastructure and just over 100 kilometres from Port of Darwin, Australia’s closest port to Asian markets.
This project is also partially located on an existing mining lease on freehold land and is adjacent to the Browns polymetallic project which is on care and maintenance.
Historical drill intersections include 108 metres at 65.6% iron from 18 metres, 65 metres at 66.4% iron from 13 metres and 35 metres at 62.9% iron from 23 metres.
FEL is purchasing its interest from Gold Valley Iron and Manganese Pty Ltd, an unrelated party, which owns the iron ore rights over the Yarram area.
Based on the 2014 drilling information, FEL has determined an exploration target of 4 to 6 million tonnes with a grade range of 60%-62% iron.