Macro Metals (ASX:M4M) has signed a binding heads of agreement with Firebird Metals (ASX:FRB) to acquire an 80% interest in each of the Wandanya, Disraeli, and Midgengadge manganese projects.
The deal is Macro’s first joint venture and the launch of its mining services division.
Completion of the acquisition is conditional upon due diligence to the satisfaction of Macro and any necessary regulatory or third party consents or approvals required before close of business on 30 September 2024.
If Macro decides to mine for a project and Firebird elects to participate, an incorporated 80:20 special purpose vehicle (SPV) will be formed, which will enter into a life-of-mine mining services contract with Macro’s wholly owned mining services subsidiary Macro Mining Services (MMS).
Under the mining services agreement, MMS will exclusively provide all services across the entire pit-to-customer supply chain on a commercial, arms’ length schedule of rates.
MMS will also leverage Macro’s in-house exploration and fast-tracked development capabilities to acquire project equity interests in the exploration assets of other mining companies that warrant development and provide pit-to-customer mining services.
Macro will free carry Firebird at 20% on each project through to the completion of a project execution plan, which will include a high level mine plan with capital and operating budget estimates, and a decision to mine by Macro.
During this period, Macro will also be solely responsible for keeping the tenements in good standing by meeting the minimum annual expenditure commitments.
Under the mining services contract, the SPV must appoint MMS as the operator of all mining operations to be conducted by the SPV for the life of mine. MMS will be exclusively responsible for managing and/or self-performing all activities required to develop and operate each mine including, but not limited to, project development, construction, mine planning, drill and blast, mining load and haul, crushing, screening and processing, off-site haulage, port services and international shipping.
The three manganese assets – Wandanya, Disraeli, and Midgengadge – are all located in the East Pilbara region of Western Australia.
Firebird & Macro Metals: Manganese M&A agreement
Macro Managing Director Simon Rushton says the company’s aim is to build core project development, construction, and operational teams within Macro supported by an appropriately resourced corporate team.
“There is a minimum overhead required regardless of whether you are supporting one operation or several and the key to being sustainable through the commodity cycles is to get the unit cost of support and operational services down as quickly as possible,” he says.
“By providing mining services to third parties we can scale our teams quicker than by only providing services as we bring each of our own projects into operation. This means we have more resources, a wider array of skills and experience, redundancy and flexibility sooner; all of which are crucial for safely running a profitable, sustainable diversified mining and mining services business.”
Firebird Managing Director Peter Allen adds that the agreement allows Firebird to continue its strategic focus on the Oakover Project and its Chinese LMFP strategy.
“By partnering with Macro, we leverage their expertise and resources to drive the development of these tenements, which not only ensures that they receive the necessary investment and development attention but also allows Firebird to benefit from potential production and value growth without immediate capital outlay,” Allen says.
“We are confident that this collaboration will unlock value for our shareholders and look forward to a prosperous collaboration with Macro.”
Firebird’s original agreement for the acquisition of the Wandanya tenements was established with Mining Equities in 2022. Under this agreement, a total shipment milestone consideration of up to $500,000 was to be paid to Mining Equities in instalments based on export shipments or mine gate sales.
Upon reaching the maximum milestone consideration, a 1% royalty would be payable on an FOB basis for export shipments or a mine gate basis for domestic sales. Mining Equities has agreed to amend the original terms by removing the $500,000 payable with the 1% royalty now payable on all export shipments and domestic sales.
Write to Adam Orlando at Mining.com.au
Images: Macro Metals
