China Mining reported that Western Plains Resources Ltd and Wuhan Iron & Steel have executed a legally binding heads of agreement pursuant to which WISCO will earn a 50% interest in WPG's Hawks Nest magnetite deposits south of Coober Pedy in South Australia.
WISCO has agreed to sole fund a minimum commitment of USD 25 million to earn the participating interest in the joint venture which will be spent on a bankable feasibility study for the development of one or more of the magnetite deposits.
If, after the minimum commitment of USD 25 million has been spent, the parties agree that further exploration or BFS work is required, or alternatively if the parties agree to commit to project development without further exploration or BFS studies, WISCO will sole fund the next USD 20 million without increasing its participating interest in the joint venture.
If WISCO withdraws from the joint venture after the minimum commitment has been spent but before commitment to project development is taken, WISCO's participating interest will be diluted on a sliding scale, such that if WISCO's expenditure is capped at USD 25 million its participating interest will be reduced to approximately 28%.
WPG will be the manager of the joint venture at all times and WISCO will assist WPG to secure funding for WPG's share of the capital expenditure required to bring the project into production.
WISCO will subscribe for approximately 12.1 million new WPG shares at a price of 25c per share for a total amount of USD 3 million. WISCO will be entitled to nominate one suitably qualified person to join WPG's board and will be granted a right to purchase 50% of WPG's share of magnetite concentrate production on arms-length terms.
WPG and WISCO will cooperate in relation to the early development of the proposed new iron ore export facility at Port Bonython. WPG's participating interest in the joint venture cannot be diluted to less than 50% but WISCO can dilute its interest to less than 50%.
Investigation of the Hawks Nest magnetite deposits has progressed well beyond the grass roots exploration stage.
(Sourced from China Mining)
