The Board of Red Hill Iron Ltd (RHI) has announced that it has entered into a binding agreement to sell its 40% interest in the Red Hill Iron Ore Joint Venture (RHIOJV) to a wholly owned subsidiary of Mineral Resources Ltd.
The transaction is subject to the approval of RHI shareholders.
Summary of transaction terms:
- The cash purchase price is AUS$400 million to be paid in two instalments:
- AUS$200 million on completion of the sale of the RHIOJV interest.
- AUS$200 million when the first commercial shipment of iron ore extracted from the RHIOJV tenements departs port.
- In addition, MinRes will pay RHI a royalty of 0.75% of FOB revenue on all iron ore that is extracted and sold from the RHIOJV tenements and, if developed in association with the development of one or more of the RHIOJV tenements, over the Bungaroo South tenement owned by MinRes.
- The key terms and conditions of the Binding Agreement are set out in the ‘Notice of Meeting’ lodged with the ASX.
The sale does not include the Other Mineral Rights over the RHIOJV tenements which are retained by RHI. The RHIOJV tenements contain a Mineral Resources of 820 million t grading 56.44% iron ore (JORC Code 2012 Edition).
A shareholders meeting is due to be held on 2 September 2021 to enable shareholders to vote on the transaction.