Global giant Anglo American has signed a mandate letter and an indictive term sheet for a long-term offtake and associated prepayment financing that could support the DSO development.

 

The prepayments cover US$8 million, plus up to $4 million for an additional vessel prepayment.

 

The pair will spend the next 60 days negotiating final terms for the binding agreements. 

 

Buena Vista has resources of 232 million tonnes that is expected to produce export grade DSO in the immediate short term and a +67.5% magnetite concentrate in the longer term.

 

Anglo has proposed buying between 560,000-800,000 tonnes of 62% DSO on a secured prepayment basis, which would cover 100% of the planned stage one production. 

 

The deal would also give Anglo first right of refusal over 100% of future production of phase two. 

 

Anglo can also provide financing for the expansion, which is being described as a "green steel" opportunity from later in 2022, and could involve a co-located hydrogen plant and using juniper tree biochar instead of coking coal.

 

Magnum, which has until recently focused on emeralds in Africa, secured the advanced magnetite iron ore project from former owners, including Richmond Mining, in February for up to A$7 million in a mix of cash and shares, with $5.5 million deferred until key milestones are met.

 

It hopes to commence production in the December quarter.

 

Some $34 million has been spend on Buena Vista over the past decade advancing the project to completed feasibility status in 2011 and 2013.

 

Recent work has indicated an undrilled high-grade magnetite prospect, named Iron Horse, located around 800m from Buena Vista, that also offers DSO potential. 

 

Magnum recently raised $6 million at 15c. Its shares were up 6% in early trade to 18.5c, valuing it at $84 million.

 

The stock has traded between 3.2-21c over the past year.