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FERRUM CRESCENT LIMITED - Update re: Moonlight Iron Ore Project, South Africa

Release Date: 28/04/2017 07:05
Code(s): FCR     PDF:  
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Update re: Moonlight Iron Ore Project, South Africa

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

28 April 2017

                                      Ferrum Crescent Limited
                                 (“FCR” or the “Group”)(ASX, AIM, JSE: FCR)

                       Update re: Moonlight Iron Ore Project, South Africa

FCR, the ASX, AIM and JSE quoted metals developer, announces, further to its previous
announcement of 15 February 2017, that, following a period of detailed negotiations with a third
party group in relation to the potential development of the Company’s Moonlight Iron Ore Project in
Limpopo Province, northern South Africa (the “Moonlight Project”), such negotiations have now
ceased without reaching any viable agreement. Consequently, the Board of FCR (the “Board”) has
regrettably decided, unless an alternative development opportunity can be secured in the short
term, to undertake an orderly winding-up and hand-over process of all of the Group’s operations
and licences associated with the Moonlight Project with a view to terminating all activities and
expenditures in South Africa as soon as practicable.

The Moonlight Project comprises a mining right and prospecting right application. Over the course
of the last four years, the Company has attempted to secure a joint venture partner to co-develop
the project. In February 2017, the Board terminated the most recent farm-in and joint venture
agreement with Business Venture Investments No. 1709 (Proprietary) Limited (“BVI”) in
accordance with its terms, as BVI failed to complete phase 1 of a bankable feasibility study by the
agreed extended deadline.

Subsequently, the Board identified and engaged in detailed negotiations with another potential
partner. However, following lengthy negotiations, and having regard to the current South African
investment climate, no final agreement has been secured.

The project’s economics have been adversely impacted by the depressed iron ore market and its
high capital cost and infrastructure requirements. Accordingly, the Board believes that it has now
exhausted all reasonable options to find and secure a credible joint venture partner to assist with
the development of the project. The Company has been incurring approximately A$450,000 per
annum in licence-related commitments, as well as staffing, contractual and other associated costs
in order to maintain the project in good standing.

The Board has now taken the difficult decision, unless an alternative development opportunity can
be secured in the short term, to withdraw from the Moonlight Project as soon as practicable
following completion of the requisite handover and administrative requirements. The Company will
therefore shortly commence an orderly winding-up process for the project leading to the planned
relinquishment of the licences. The Company expects to incur expenses of approximately
A$100,000 for the termination of certain long-term employment contracts at the end of June 2017
and all other project costs will also be terminated as soon as possible following satisfaction and
compliance with the applicable regulatory requirements.
The Company will inform the relevant regulatory authorities of its decision and will cooperate fully
with them during the expected maximum three month winding up period prior to the project’s
licences being relinquished or transferred.

The Board believes that the abovementioned actions will further reduce corporate overheads and
administrative costs within the Company and enable shareholder funds to be refocused on its
planned exploration activities in Spain. In particular, the Board believes that shareholder value will
best be generated by initially proving up a JORC (2012) compliant lead-zinc resource estimate at
the Company’s Toral project in Spain, where mineralisation has historically been encountered and
for which the first drill contract has recently been announced.

Commenting today, Justin Tooth, Executive Chairman of FCR, said:
“The Company has spent considerable time, effort and resources in searching for the right
development partner for the Moonlight Project to help address the significant headwinds of the
global iron ore market environment. The Board has explored conventional technology routes and,
more recently, certain new technological advancements which potentially offered lower capital
requirements and operating expenses.
“However, despite our best endeavours, we have been unable to secure a path for the
development of the Moonlight Project and are mindful of the significant costs associated with
continuing to hold and maintain the project. I would like to thank our staff in South Africa who have
worked relentlessly towards creating value. This difficult decision is a consequence of the
challenging circumstances pertaining to the Moonlight Project, South Africa and global iron ore
price and is by no means a reflection on their efforts.
“The significant size, location and nature of this bulk mineral asset mean that many factors of
production have to be aligned at the right price and this is simply not the case for now. The
Company will now focus on the mobilisation and initiation of its first drill programme at its Toral
lead-zinc project in Northern Spain which in itself is an exciting milestone for the Company.”


For further information on the Company, please visit www.ferrumcrescent.com or contact:

Ferrum Crescent Limited
Justin Tooth, Executive Chairman
Grant Button, Director and Company Secretary                        T: +61 8 9474 2995

UK enquiries:
Laurence Read, Non-Executive Director (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

The information contained within this announcement is deemed by the Company to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.

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