South Australia-focused iron ore developer Magnetite Mines Ltd (ASX:MGT) has signed a deal with JFE Shoji Australia Pty Ltd – a subsidiary of Japanese steel supplier JFE Shoji Corporation – to progress its Razorback Iron Ore Project through a definitive feasibility study (DFS).
According to the non-binding Heads of Agreement with JFE Shoji Australia, the latter will receive ‘DR-grade’ magnetite concentrate production offtake rights for up to 10 percent of the project’s Stage 1 production across a term of 15 years.
In addition, JFE will have the option of converting its offtake rights to equity or joint venture participation in the project, with Magnetite Mines stating that a joint venture would be its preferred structure for progressing Razorback.
Both parties are set to complete a Definitive Agreement by January 31, 2025.
Magnetite Mines chief executive officer Tim Dobson said the agreement had been achieved through strong relations between the two companies.
“Over the past year, Magnetite Mines has established a strong relationship with JFE Shoji Australia Pty Ltd, who is a part of the Japan’s JFE Group,” he said.
“We are delighted to formalise our collaborative efforts today, the culmination of a comprehensive due diligence effort and the first stage of what we envisage will be a long and prosperous relationship for both parties.”
South Australian minister for Energy and Mining Tom Koutsantonis also commended both parties on the deal.
“The South Australian Government recently released our Green Iron and Steel Strategy, and today’s announcement by Magnetite Mines aligns with the fundamental objectives of that strategy,” he said.
“South Australia has a key advantage with abundant magnetite resources, which presents the opportunity for the state to be at the vanguard of efforts to meet the world’s increasing demand for green iron.”
The market was pleased with the news, and at 12:10 AEDT, Magnetite Mines was trading at 31 cents, a rise of 8.77 percent since the market opened.