Hancock Prospecting unit Hancock Magnetite (HMPL) has reached an agreement to earn into the Mt Bevan iron ore project in Western Australia.

Signed with the project joint venture (JV) firms Legacy Iron Ore (60%) and Hawthorn Resources (40%), the deal provides exclusive rights for HMPL to earn into the project and form a new JV agreement.

Under the deal, Hancock Magnetite will initially invest $6.5m (A$9m) in the project.

Of this investment, $5.8m (A$8m) will be paid to Legacy and Hawthorn in proportion to their interest while the remaining $0.73m (A$1m) will be used as working capital for the new JV.

This investment allows HMPL to own a 30% interest in the project while Legacy and Hawthorn will have 42% and 28% interests, respectively.

During the stage one earn-in, HMPL will have the option to earn an additional 21% interest in the project by funding the project’s pre-feasibility study.

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Upon stage one earn-in completion, HMPL will have a 51% stake in the project while Legacy will own a 29.4% interest. Hawthorn will own the remaining 19.6% stake.

Legacy CEO Rakesh Gupta said: “As you may be aware that the demand for premium high-grade iron ore products, magnetite has been growing due to its efficiency and ability to reduce the environmental pollution for the steel industry.

“I am highly confident that with the support of our parent company NMDC Limited (A Government of India Enterprise), Hancock Prospecting Pty Ltd and Hawthorn, this Project would be successfully developed and would bring a social- and economic boost to regional Yilgarn province, WA and ultimately Australia.”

Hancock said that additional work programmes would be carried out to support the advancement of the project to a bankable feasibility study.

Hawthorn managing director Mark Kerr said: “Hawthorn is delighted to see Hancock join us to expedite development of our top-quality iron ore project. All steel mills favour high-grade ore as they seek to reduce emissions going forward. This is a transformational deal for Hawthorn and its shareholders.”

The earn-in agreement is subject to the signing of an agreement between the parties on a new JV agreement to develop the project, as well as regulatory approval.

Hancock unit Atlas Iron will serve as the manager of the new JV.

Situated 250km north of Kalgoorlie and 100km west of Leonora in the Central Yilgarn region, the project is on a large tenement E29/510 that comprises hosts 1,170 million tonnes (Mt) of magnetite resource.