Centrex Metals has received payment of a further Aus$8 million from Baotou Iron & Steel to begin the stage 2 pre-feasibility study (PFS) of the Bungalow Magnetite Joint Venture on South Australia’s Eyre Peninsula.
The payment was received ahead of schedule and is the second progress payment by Baotou, which has now invested Aus$16 million into the joint venture.
The Bungalow stage 1 scoping study is on schedule to be completed in June but owing to encouraging results from the JV’s recent drilling program and a desire to accelerate the project, Baotou elected for early payment of the PFS funds. The drilling program will also result in a revised inferred resource estimate this month.
The stage 2 PFS, which is now scheduled to begin in late March, will involve resource definition and geotechnical drilling. This will be followed by process design, mining, environmental, transport and utilities studies.
Baotou is based in China’s Inner Mongolia region and is among the top 10 steel producers in China. As well as the Bungalow JV interest and commitments, it holds a direct 7.1% stake in Centrex.
The JV agreement provides for Baotou pay up to Aus$40 million for a 50% undivided interest in the iron ore rights to the Bungalow magnetite deposit. The $16 million assigned to date gives it a 20% interest in the rights while the stage 3 payment of $24 million to complete a bankable feasibility study will take the stake to 50%.