Summary of the Mining Services Contract for the Extension Iron Ore Project Awarded to ASX-Listed Small Iron Ore Company Macro Metals
1. Project Overview
• Location and Scale
◦ The project is located in the East Pilbara region of Western Australia, just 2 km from BHP's Yandi Iron Ore operations and 20 km from Rio Tinto's Yandicoogina mine.
◦ It comprises three mining leases with a total area of 27.6 square kilometers, located 270 km from the Port Hedland port, accessible by truck to the Utah Point bulk terminal.
• Resource Estimate
◦ The resource estimate completed in 2019 shows that the project has 16.1 million mt of indicated resources with an iron grade of 54.2% (roasted iron 60.49%), SiO₂ 5.7%, Al₂O₃ 5.6%, phosphorus 0.046%, and loss on ignition (LOI) 10.4% (using a 53% iron grade cutoff).
◦ After removing <1mm particles through dry screening, the resource was upgraded to 11.29 million mt, with the iron grade increasing to 57.16% (roasted iron 63.84%), SiO₂ reduced to 3.6%, Al₂O₃ 4.63%, and phosphorus 0.05%.
2. Core Contract Terms
• Scope of Services and Partners
◦ Exclusive technical services: MMS is responsible for exploration, permit applications, and technical verification, using a cost-plus 15% billing model.
◦ Joint mining operations: MMS and strategic partner RE:GROUP jointly undertake mine construction, drilling and blasting, mining, loading, and transportation services (cost-plus 15%).
◦ Exclusive processing services: MMS provides crushing and screening services under a "Build-Own-Operate" (BOO) model, charged at market terms.
• Economic Terms
◦ The total contract value will be announced after MMS completes the project development plan and technical verification.
◦ Equity option: Macro Metals is granted an option to acquire 27.3% equity in the project (subject to shareholder approval), exercisable before project commissioning, with the consideration being the issuance of 175 million company shares.
3. Technical Verification and Advantages
• Metallurgical Test Verification
◦ Verification of historical test results: The iron grade increased to 57.16% after screening, with low phosphorus content (0.05%), suitable for blending with high-phosphorus iron ore for export.
◦ Logistics advantage: Utilizing a logistics center 28 km from the port (including accommodation and raw material storage), providing stockyard and blending opportunities, reducing transportation costs.
• Resource Expansion Potential
◦ Plans to explore unexplored mineralized outcrops to extend mine life.
◦ Aims to apply for an annual export quota of 1.5-2 million mt, subject to negotiation with the Pilbara Ports Authority (PPA).
4. Management Team and Strategic Significance
• Management Statements
◦ Chairman Tolga Kumova: Emphasized that the contract reflects MMS's professional capabilities, with technical services generating immediate cash flow, and the project's location and low-phosphorus characteristics provide advantages for blended products.
◦ Managing Director Simon Rushton: The partnership with RE:GROUP is solid, and future collaborations will focus on developing more bulk commodity projects; MMS has participated in bids across multiple mining areas in Western Australia with positive feedback.
• Business Expansion
◦ MMS recently completed its first revenue-generating project (repairing a client's crushing plant), demonstrating its technical capabilities.
◦ The company is positioned as a diversified mining services provider, covering the entire chain from mining, processing, transportation to shipping.
5. Project Execution Plan
• Short-Term Actions
◦ Assess existing permit status, accelerate final approvals, and push for commercial production.
◦ Apply for bulk sample transportation permits for trial exports.
◦ Optimize the Port Hedland transport corridor and jointly develop a transportation plan with RE:GROUP.
◦ Develop a mine development plan, mining timetable, and execution plan.
6. Equity Structure and Compliance
• Project Ownership
◦ The project is held by private company Project Rusty Pty Ltd, with Macro's two directors (Simon Rushton and Rob Jewson) each holding 27.3% equity.
◦ Subject to shareholder approval under ASX Listing Rules 10.1 (related party transactions) and 10.11 (option exercise).
7. Resource Estimate Technical Details (JORC Standard)
• Data Basis
◦ Drilling data: Includes 333 reverse circulation drill holes (3,992 meters) and 56 diamond drill holes (501 meters), with sampling intervals of 0.25-2 meters.
◦ Analytical methods: X-ray fluorescence (XRF) for major elements and thermogravimetric analysis (TGA) for LOI.
• Modeling and Classification
◦ Inverse distance cubed (ID3) interpolation was used, with block sizes of 1.25m×1.25m and search radii of 125-250 meters.
◦ Resources classified as indicated, based on geological continuity, data quality (100×100 meter infill drilling), and consistency in modeling methods.
8. Market Positioning and Competitive Analysis
• Product Benchmarking
◦ The screened iron ore quality benchmarks against Rio Tinto's Robe River Fines, FMG's blended fines, and other Platts 58% index benchmark products.
◦ Similar to the operational models of nearby small trucking projects such as Mineral Resources' Wonmunna and Iron Valley.
9. Risks and Compliance Statements
• Compliance Statements
◦ The resource estimate was completed by Widenbar and Associates, compliant with the JORC 2012 standard, with data verification including duplicate samples and standard sample analysis.
◦ Independent geologists Lynn Widenbar and Robert Jewson (company director) signed the report as Competent Persons.
10. Company Background
• Macro Metals Limited
◦ ASX-listed under code M4M, with business covering mineral exploration, development, and mining services.
◦ Subsidiary MMS provides end-to-end services (mining, crushing, transportation, shipping) and holds a portfolio of iron ore and manganese assets.
Summary
The contract secures long-term revenue for Macro Metals through a dual profit model of technical services and mining operations (cost-plus + market rates), combined with the advantages of low-phosphorus ore blending and port logistics, giving it strong market competitiveness. The project has clear resource potential and a well-defined execution plan, and if approved and expanded successfully, it is expected to become a core growth driver for the company.
