Gateway Mining to divest Sylvania iron ore rights to Rio Tinto Exploration
Gateway Mining will retain a 1.5% gross revenue royalty for all other minerals and products (excluding iron ore) extracted from the Sylvania tenements.
Junior explorer Gateway Mining (ASX: GML) has inked a deal with Rio Tinto Exploration, a wholly owned subsidiary of Rio Tinto (ASX: RIO), and DiscovEx Resources (ASX: DCX) giving Rio the option to acquire 100% of the iron ore rights in DiscovEx’s Sylvania project in Western Australia’s Pilbara region.
Gateway currently holds a 1.5% gross royalty over two iron ore tenements within the project, obtained in mid-2020 when it divested its non-core Sylvania asset to DiscovEx subsidiary Lighthouse Resource Holdings.
The divestment was geared towards allowing Gateway to maintain a focus on exploration and development of its flagship Gidgee gold project, also in WA.
Option period
Today’s deal will give Rio a two-year option period to acquire the iron ore rights at Sylvania.
Consideration will comprise a $10,000 option payment for the initial two-years and option extension fees of $10,000 per year for an additional four-year period.
It will also include a $100,000 fee payable by Rio on exercise of the option and a free on board royalty of 0.6% to be paid for the first 12 years of iron ore production.
In the event that Rio exercises the option, Gateway has agreed to vary the royalty as it relates to iron ore but will retain the 1.5% royalty in respect of all other minerals and products extracted.
DiscovEx option agreement
Meanwhile, DiscovEx has executed two separate option agreements with Rio Tinto Exploration relating to the acquisition of iron ore rights across another four tenements within the Sylvania project.
The first agreement covers the existing Spearhole detrital iron ore deposit, while the second relates to three tenements covering the broader exploration area inclusive of several outcropping banded iron ore ridges and potential buried detrital iron deposits.
Both agreements give Rio the rights to explore, evaluate and develop iron ore mineralisation within the areas of interest.
Total consideration is expected to be around $9.3 million, inclusive of option extension fees and exercise payments, plus a royalty on future production.
Project significance
DiscovEx managing director Toby Wellman said the Rio agreements validated the significance of the Sylvania project.
“Attracting a tier one global miner to explore the iron ore potential at Sylvania speaks volumes about the quality of the tenement package we have been able to accumulate over the past two years,” he said.
“Rio has the infrastructure network and industry knowledge to maximise the value of these assets… and there are advantages of data sharing to progress our main focus, being the discovery of gold and base metals resources.”