Tombador Iron (ASX:TI1) has signed a deal to purchase the Colomi Iron Project in Brazil, after which it intends to rebrand as ‘Colomi Metals’ under the new ticker CM1.
According to the binding agreement, Tombador will acquire all of the shares in Colomi Iron Mineracao SA (CIM), which owns the Colomi Project in Brazil’s Bahia state, for US$3 million ($4.47 million) in cash and $5.5 million in shares.
The company will also issue 10 million Class A and 10 million Class B performance rights to CIM, as well as a royalty on the sale of iron ore concentrate from Colomi.
Located 520km north-west of the state capital Salvador, the project consists of 14 exploration licences totalling 22,745 hectares across the municipalities of Casa Nova, Sento Se, and Remanso.
Split into two sub-projects by the Sobradinho Lake, Colomi North consists of the Colomis North, Caldeirao dos Colomis, and Boqueirao do Joaquim iron deposits. Colombia South, meanwhile, consists of the Jacobina, Bicuda Norte, and Bicuda Sul deposits.
Between 2006 and 2010, CIM — in conjunction with Vale SA — explored all of the 11 exploration licences that contain the iron ore deposits at Colomi. This included topographic and aeromagnetic surveys, mapping and sampling, drilling, and metallurgical testing.
A resource estimate for the Colomi Project was published in 2011 and updated in April this year. It currently stands at 5.5 billion tonnes grading 26.6% iron.
Notably, the project sits adjacent to the company’s previously-held Tombador Iron Project, which was sold in January this year, leaving Tombador without a significant asset. As such, the purchase of the Colomi Project would constitute a change in the “nature and scale” of its activities.
Tombador is therefore required to seek shareholder approval for the change. Should that approval not be received, the company will be precluded from proceeding with the acquisition.
“The project has the potential to be developed into a world class producer of premium-grade blast furnace concentrate and premium direct reduced iron-grade concentrate products with low carbon density,” Tombador Chair Anna Neuling says.
This, she adds, “would assist with the de-carbonisation of the global iron and steel industry, and could provide an input for greener steel”.
As part of the proposed acquisition, Tombador is also seeking to raise up to $7 million by issuing 35 million new shares at $0.20 each.
Write to Oliver Gray at Mining.com.au
Images: iStock
