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Corporate and Operational Update
FERRUM CRESCENT LIMITED
(Incorporated and registered in Australia and registered as an external company in
the Republic of South Africa)
(Registration number A.C.N. 097 532 137)
(External company registration number 2011/116305/10)
Share code on the ASX: FCR
Share code on AIM: FCR
Share code on the JSE: FCR
Australian ISIN: AU000000WRL8
South African ISIN: AU000000FCR2
15 June 2016
Ferrum Crescent Limited
(“Ferrum Crescent”, the “Company” or the “Group”)(ASX, AIM, JSE: FCR)
Corporate and Operational Update
Ferrum Crescent, the ASX, AIM and JSE Limited quoted metals project developer, is
pleased to announce a corporate and operational update.
Moonlight Iron Ore Project, South Africa
Since the beginning of 2016, parallel to the previously announced review and
strategic refocusing of the group’s assets and corporate structure, the Company has
been progressing a number of new potential avenues, both independently and in
conjunction with our existing partners and various third parties, to generate value for
our flagship Moonlight project.
Moonlight, located in Limpopo Province in the north of South Africa, is a magnetite
iron ore project with a development objective to ultimately produce a high-quality
product for use in blending by steel producers. The project is situated near to the
Thabazimbi rail hub, a loading yard that currently serves the third party Kumba mine.
Highlights:
- Board actively evaluating engineering pathways for alternate production routes,
based on existing technologies and modelled on current equipment types which
are in use at comparable mining operations. Examining lower cost capex
development options with potential partners utilising alternative methods for the
transportation of concentrate rather than a pipeline.
- Discussions with new potential off-take partners for the supply of concentrate.
- Recent re-engagement to seek to recover historic geological data and core
samples on both the Julietta and Moonlight licence areas.
- Ongoing assessment of potential construction/production share partners on a
Build-Operate-Transfer model with our farm-in partner, Business Venture
Investments No. 1709 (Proprietary) limited (“BVI”) and its sister company,
Ovation Capital.
- Memorandum of Agreement and co-operation framework (the “MoA”) signed with
the Mayor of the Lephalale Municipality situated in the Waterberg District of the
Limpopo Province.
- With a full mining permit in place, the MoA secures the necessary consents from
local stakeholders for progression of the project into development.
- Items covered by the MoA include: employment, corporate social responsibility
and skills training. The MoA will assist our discussions with both our existing
partners and various third parties with respect to the Moonlight project’s future
development.
Following completion of our review process, the Board has sought to refocus the
group’s operations in South Africa and progress a number of key work streams. A
new internal engineering study is underway to establish and assess revised capex
estimates, routes to market and rate of return components. In addition, discussions
with credible potential new development and offtake parties have commenced, with
the recent completion of the MoA with the local municipality serving to establish a
stronger pathway towards cooperative sustainable development. With the active
support of the Lephalale municipality, the Board has also recently reinitiated a
process to seek to recover historic exploration data and core samples in respect of
the Julietta and Moonlight licence areas.
Whilst the iron ore price continues to fluctuate, the Board believes that the Moonlight
deposit’s location and high-grade make it a viable, near-term production source for
iron ore that can then be blended with more prevalent, lower-grade material in order
to produce a concentrate suitable for steel production in Africa, the Middle East or
Asia.
Option over GoldQuest and its lead-zinc Exploration Projects, Spain
As announced previously, funds were received from the Company’s successful
£650,000 (gross) equity fundraising in early May 2016. Consequently, the requisite
transaction documentation and legal process to enable exercise of the Company’s
option over GoldQuest Iberica, S.L. (“GoldQuest”) (the “Option”), which owns
interests in two promising lead-zinc exploration projects in Northern Spain, is now at
an advanced stage. The Option is currently valid until 31 July 2016 and the Board is
confident that the Company will be able to exercise the Option and complete the
acquisition of GoldQuest ahead of this scheduled deadline.
Our planned work programme to determine the extent of the mineralisation on the
two projects is expected to commence shortly following completion of the proposed
acquisition. Our Iberian team’s focus will be on implementing a low-cost, high-value,
data analysis and metallurgical programme to test the historic findings and
assumptions, in order to examine the thesis that the ore body at the Toral Project
contains previously-unidentified near-surface zones of mineralisation and to move
towards establishing a new JORC compliant resource estimate for both the Toral
Project and the Lago Project.
Justin Tooth, Executive Chairman of Ferrum Crescent, commented:
“Our recent reprioritising of tasks and corporate restructuring is showing real benefits
as we endeavour to derive value from our flagship project in South Africa and Option
over GoldQuest in Spain.
“With a world-class team of geologists and mining engineers in place, with significant
experience of working in our key geographic regions, we are well placed to obtain
and re-process the additional historical exploration data on Moonlight and finalise key
development agreements. This will strengthen our ability to negotiate with credible
partners for the future development of mining operations. We have an exciting time
ahead and I look forward to announcing a further update in due course.”
For further information on the Company, please visit www.ferrumcrescent.com or contact:
Ferrum Crescent Limited
Justin Tooth, Executive Chairman
Grant Button, Company Secretary
T: +61 8 9474 2995
UK enquiries:
Laurence Read (UK representative)
T: +44 7557 672 432
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 (0)20 7409 3494
Beaufort Securities Limited (Broker)
Elliot Hance
T: +44 (0)20 7382 8300
Bravura Capital (Pty) Ltd (JSE Sponsor)
Doné Hattingh
T (direct): +27 11 459 5037
Notes to Editors:
Further Information on the Moonlight Project, South Africa
Ferrum Crescent’s principal project is the Moonlight Iron Project located in Limpopo Province in the
north of South Africa. The Moonlight Deposit (upon which the Project is based) is a magnetite deposit
located on the Moonlight, Gouda Fontein and Julietta farms and is the main operational focus for the
Company. Iscor Limited (“Iscor”), which explored the Project in the 1980s and '90s, reported
mineralisation capable of producing a concentrate grading at 68.7% iron. At that time, Iscor concluded
that the deposit, which was described as being comparable to the world’s best, was easily mineable
due to its low waste-to-ore ratio. The beneficiation attributes of Moonlight ore are extremely
impressive, with low-intensity magnetic separation considered suitable for optimum concentration.
Metallurgical tests on Moonlight material, undertaken since then by Ferrum Crescent, suggest that
Iscor’s historical results are conservative, that good metal recoveries can be achieved, and that the
resulting concentrates have a high iron content and only negligible impurities, at grind sizes
considered to be industry standard (P80 of 75 - 125 microns).
Key features of the Moonlight Project to date are:
- JORC (2012) compliant Mineral Resource;
- Historical drilling, drilling by the Group, geological modelling and a high density geophysical
survey conducted by the Company in 2012 confirm tonnage upside potential;
- 30 year Mining Right granted;
- Environmental licence (EIA) in place for the Moonlight mining area (approved 4 April 2013);
- Metallurgical test work indicates the potential for high quality concentrate and/or pellets with in
excess of 69% iron content and low deleterious elements (DR grade pellets for use in direct
reduction iron/electric arc steel-making processes);
- The quality of product that can potentially be produced at Moonlight is a clear differentiator
against its industry peers, as is the access to infrastructure (port, power and rail);
- Duferco offtake partner (4.5 Mtpa plus first right on a further 1.5 Mtpa if not sold domestically).
South Africa currently has a growing demand for high grade iron concentrate and/or pellets for
its steel industry;
- Independent valuation by The Mineral Corporation completed in June 2014 - this valuation
served as the basis for the 2015 BVI (Ovation Capital) farm-in transaction;
- BEE compliant South African investment company (BVI) will provide a completed BFS to the
Group by 2018/19 at no expense to the Group in return for a 39-43% equity position in the
Moonlight Project;
- Located near Kumba railhead at Thabazimbi (Kumba operation depleting in grade), Limpopo
Province, northern South Africa;
- New Eskom power plant (4,800MW) commissioning first 800MW module;
- Richards Bay port expansion for potential export of future iron ore products; and
- Local community, Ga-Seleka, has an effective 3% carried interest in the Moonlight Project.
Further Information on GoldQuest and the Iberian Exploration Projects
GoldQuest is a private company incorporated in Spain which owns 100 per cent. of both the Toral
Project and the Lago Project in northern Spain, each having high prospectivity for lead and zinc.
Principal Terms of Ferrum Crescent’s Option
- Option to potentially acquire 100 per cent. of GoldQuest. GoldQuest owns 100 per cent. of two
lead-zinc exploration projects in the provinces of León and Galicia, in historic Spanish mining
areas.
- Exclusive option is valid until 31 July 2016. If exercised, Ferrum Crescent, will be required to:
o pay up to approximately £320,000 in cash consideration (calculated as a fixed amount of
£250,000 plus a further cash payment comprising the lesser of 50 per cent. of GoldQuest’s
current liabilities and £92,500, minus the above mentioned option consideration); and
o issue, credited as fully paid, 100 million new ordinary shares in the capital of Ferrum
Crescent.
Toral Project
The Toral Project has been extensively explored historically by its previous owners Portex Minerals Inc.
and Lundin Mining S.L. and the 2,024ha of mineral rights contains extensive high grade zinc
mineralisation. Located in north-west Spain, approximately 400km north-west of Madrid, the project’s
licence area hosts excellent road, rail and power infrastructure and is situated in a known historic mining
jurisdiction. The asset also has a pre-existing NI 43-101 resource estimate reported by Micon International
Co. Limited on 30 April 2012.
Lago Project
The Lago Project is located approximately 54km to the north-east of the Toral Project. Historical
investigations completed by or on behalf of the Spanish mining firm, Exploracion Minera International
Espana S.A. (“EXMINESA”), between 1985 and 1990, indicated that mineralisation at the Lago Project
may be similar to that encountered at the Toral Project with vertical, lenticular bodies (probably more
than one) approximately 800m long by 300m wide.
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