By Brett Cole
Radar Iron Ltd, the fledging iron ore miner, says it may acquire a South American mining project as it scours the globe for low capital, high-returning iron ore mines that have access to infrastructure as it awaits the expansion of the Western Australian port of Esperance.
“The acceptance of risk in the Australian iron ore sector has weakened, especially at the junior mining end, while many companies struggle to resolve the issue of accessing infrastructure for export,” Radar’s managing director Jonathan Lea told DataRoom. “In South America, the project we have been shown has every chance of early cash flow, a low capital cost and access to a port.”
Lea would not specify which South American country Radar’s potential project is in, nor the cost of acquiring it. Sydney-based investment and advisory firm Lusona Capital has brought the project to Radar.
Perth-based Radar has issued 2.5 million unlisted options to Lusona Capital at 5 cents per option that will vest if an agreement to acquire the South American project is signed. Another 2.5 million options at the same price will vest to Lusona Capital on the first shipment of iron ore. Both tranches have a five-year expiry date from signing.
Radar, which has a market value of $2 million, owns the iron ore rights to tenements in central Yilgarn, Western Australia. The expansion of the Esperance’s port, which will enable it to ship about 1 million tonnes of iron ore annually, is crucial to Radar’s ability to exploit its Western Australian tenements.
Lea says the time taken to expand the Esperance port has forced it to find other iron ore mining opportunities that can create near term cash flow for its shareholders.