Magmatic Resources has entered a farm-in and joint venture (JV) agreement with Fortescue’s subsidiary FMG Resources for the exploration of the Myall Project in central-west New South Wales (NSW), Australia.

Fortescue has committed up to A$14m in investment over six years to earn a majority stake in the project.

It will also become a cornerstone investor in Magmatic by subscribing for 75,946,151 shares, enabling the company to hold a substantial interest in the company and its projects.

The share placement, priced at A$0.04884 per share, will raise approximately A$3.71m, a 10% premium over the company’s 30-day volume-weighted average price as of 31 January 2024.

The initial earn-in period allows Fortescue to gain a 51% interest in the Myall Project by spending A$6m on exploration within four years.

Following this, a JV will be established, with Fortescue managing and solely funding further exploration activities.

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To increase its stake to 75%, Fortescue can invest an additional A$8m over two years after the JV commences.

If Magmatic Resources decides not to contribute to the project’s development, Fortescue has the right to purchase their JV interest at market value.

Magmatic Resources, through its subsidiary Modeling Resources, will operate the project during the initial four-year farm-in period.

It views the Myall Project as having Tier 1 potential, and the partnership with Fortescue is expected to significantly advance exploration of the Corvette and Kingswood Prospects, as well as other high-potential targets within the area.

Additionally, the investment by Fortescue will enable Magmatic Resources to progress its other projects, including Wellington North, which is adjacent to Alkane Resources’ Boda-Kaiser deposits.

Magmatic Resources executive chairman David Richardson said: “We are excited to joint venture and partner with Fortescue to advance our exploration efforts across the Myall Project area.

“Myall has many of the signatures of a Tier 1 copper-gold deposit and Magmatic has recognised the need to partner with a major to further advance the project following the maiden resource.

“Fortescue’s cornerstone investment in MAG will allow the company to simultaneously advance our other two projects at Wellington North and Parkes, which are strategically located near Alkane Resources Boda-Kaiser deposits and Tomingley Gold Operations, respectively.”

Last month, Accelerate Resources completed the sale of Pilbara licences to a Fortescue unit.