CHARTER Pacific Corporation (ASX: CHF) is in the box seat to negotiate a partnership deal for its iron-ore deposit in Mauritania after securing $US3 million in funding to buy the deposit permit.
The Gold Coast investment company, better known for passive investments in ASX-listed shares, says it has been in discussion with a number of parties that have discussed joint-venture proposals and off-take agreements for the West African venture which could be in production in as little as nine months.
Charter Pacific announced this week that its subsidiary, Legleitat Iron Mauritanie SA, has finalised first-round funding for the acquisition of the advanced hematite deposit permit 2183 in Mauritania.
The funds have been forwarded by local partner WAFA Mining & Petroleum in return for an extra 10 per cent interest in Legleitat. Charter will retain 60 per cent, while the Mauritanian Government holds 20 per cent.
“We now own the permit,” says Charter Pacific’s executive chairman Kevin Dart (pictured).
“We’ve had three to four parties waiting for us to finalise this.
“These parties have expressed interest given the low cost of production, existing infrastructure and the other benefits of the Legleitat project.
“We’re talking to some very large companies, although none of them are Australian.”
Charter Pacific has held interests in iron ore exploration permits in Mauritania since 2010 and the 12.5 million tonne Legleitat resource is located adjacent to its current Kaoua El Khadra Permit 792 exploration tenement.
Charter Pacific bought Legleitat earlier this year for just $US10 million, to be paid over five years. The previous operator spent $US45 million in developing the mine which has lain dormant since November last year.
Dart admits the fall in iron ore prices has dampened investor interest in the sector, but he says Legleitat is a low-cost mine that will target nearby markets in Europe, including Turkey, Spain, Italy, France and Germany.
Ore is expected to be shipped from Legleitat for about $US50 a tonne free on board.
Glencore is spending $US2 billion to develop its nearby iron ore resource in Mauritania, with iron ore expected to land at $US20-30 per tonne free on board.
“The advantage that we have is our cost of production,” says Dart.
He says that Legleitat will deliver iron ore below some of the cheapest producers in the market.
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