ASX-listed Hawthorn Resources has exercised its right to convert its participating interest in the Mt Bevan magnetite project joint venture (JV) with Legacy Iron Ore and Hancock Magnetite to a royalty.
Hawthorn’s equity position in the project will be diluted from 19.6% to zero and it will be entitled to a royalty payment of 1.0% of the net free-on-board revenue from the project, once production and sales start.
By electing to convert to the royalty, Hawthorn will not need to contribute to the upcoming forward works programme of about A$20-million and run down its existing cash reserves or raise additional equity funding in the future to continue as an equity participant in the project.
“Mt Bevan is a serious next-generation iron-ore project slated as a key ingredient for green steel production in Australia. But with an estimated capex approaching A$5-billion, it’s not without its challenges including capital intensity and the environmental and social licence approvals required at state and federal levels. For smaller, lower capitalised companies like Hawthorn, the conversion to a valuable 1% royalty is a logical and sensible decision taken in the best interests of all its shareholders,” said MD and CEO Brian Thornton.
Situated 250 km north of Kalgoorlie and 100 km west of Leonora in the Central Yilgarn region of Western Australia, Mt Bevan is one of the largest high-grade magnetite projects in Australia with a current indicated and inferred resource of 1.178-billion tonnes iron-ore at 34.9%.
In July, the JV completed a prefeasibility study for a 12-million-tonne-a-year project.
