Shares in Forrestania Resources (ASX:FRS) have surged after the company signed an option agreement to acquire privately held Netley Minerals, which holds a number of iron ore licences in the Yilgarn region of Western Australia.
The Koolyanobbing Iron Project is thought to have potential due to its proximity to Mineral Resources’ (ASX:MIN) Koolyanobbing operations. The project lies on the Koolyanobbing Greenstone Belt, which is 45km long and up to 10km wide.
Netley’s iron ore rights cover 75% of the greenstone belt.
Under the three-month option agreement, Forrestania will pay Netley an option fee of $20,000, as well as an additional $20,000 should it wish to extend the period.
During the option period, Forrestania will conduct a drilling program of at least 10 reverse circulation holes at depths of between 90m and 150m each, at its own cost.
Subject to several conditions, including completing due diligence and obtaining shareholder approval, Forrestania may exercise the option by issuing to Netley 200 million ordinary shares, 75 million listed options, 150 million performance rights, and 100 million unquoted options.
Following the completion of a heritage survey, Forrestania will work with Netley — which has a program of work already approved — to fast-track a drilling program to test hematite targets.
A heritage consultant has been engaged to undertake the survey early next month.
Chairman John Hannaford says the option allows Forrestania to test targets prior to exercising the option, allowing Forrestania to confirm the iron ore targets modelled by the vendors.
“If the drilling during the option period proves successful, then following exercise of the option we can proceed directly with the drill out of several substantial iron ore targets,” he says.
“The location is close to our Southern Cross and Forrestania areas and provides an immediate drilling opportunity, with significant upside.”
As exploration progresses, the results will guide a more detailed drilling program and geological assessment, setting the stage for a comprehensive evaluation of the project’s scale and quality.
Further, upon settling the acquisition of Netley, the vendors will nominate one representative to join Forrestania’s board of directors, initially as a non-executive director.
A second director appointment may occur progressively over the six months following the settlement.
Shares in Forrestania Resources were up more than 226% to $0.062 as of 11:50am AEST.
Write to Aaliyah Rogan at Mining.com.au
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