Mineral Resources (MRL) has signed a farm-in and joint venture (JV) agreement that allows it to buy a 50% stake in Brockman Mining’s Marillana iron ore project in Pilbara, Western Australia (WA).

In exchange for the 50% interest, MRL is required to incur an expenditure of A$250,000 ($185,289) towards exploration and development activities on the Marillana tenements, as well as complete process design criteria of the processing plant.

The company also needs to optimise the mine plan study and finalise the development layout plan.

Upon completion of the farm-in obligation, MRL will form a JV with Brockman on 50:50 basis for the Marillana project and become manager of the JV.

The partners will initially develop a 20Mtpa iron ore export operation on the tenements, with the potential to scale the production capacity to 30Mtpa.

The project cost is expected to be up to A$300m ($222.34m), which will be split equally between the JV partners.

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MRL will sign a life-of-mine mining services deal. It will build, own and operate the crushing and beneficiation plants, as well as product stockyard and train load-out facility.

As the JV manager, the company will process the run-of-mine ore and load iron ore products onto its rail system for transportation to the port.

“The Marillana project has aggregate mineral resources of iron ore totalling 1.51 billion tonnes.”

Furthermore, the company will offer the Marillana JV access to its Pilbara Infrastructure Project.

This will allow the transportation of iron ore product via MRL’s 320km Pilbara light-rail system from the mine site to Port Hedland.

Mineral Resources managing director Chris Ellison said: “Both companies recognise that MRL is firmly on track to commence construction of its Pilbara Infrastructure Project by the middle of 2019 such that the timing was right to formalise an arrangement that will see us work together to bring the project into operation.”

Once the product reaches the port, it will be stockpiled in MRL’s fully automated train receival and port stockyard. Iron ore from the Marillana project will be delivered to China.

Ellison added: “This on-site capability will now be fully complemented by the low operational cost benefits that will be realised by using MRL’s innovative lightweight mine-to-port rail system linked to a Capesize carrier berth in the world’s largest bulk commodity port to deliver the Marillana product from the mine into a ship.”

Located in the Hamersley Iron Province, the Marillana project has aggregate mineral resources of iron ore totalling 1.51 billion tonnes, including ore reserves of around one billion tonnes.

The transaction is dependent on the satisfaction of certain conditions, including the receipt of regulatory and shareholder approvals.