Mineral Enterprises Australia (MEA), a wholly owned subsidiary of Bangalore-based iron ore miner Mineral Enterprises (MEL), has acquired a 40% stake in the gum flat iron ore project of the Australian mining firm Lincoln Minerals'(LML).
ASX-listed LML entered into a joint-venture agreement with MEL, promoted by the Bangalore-based Poddar Family, in December 2007 for iron ore exploration in South Australia.
Although a joint venture agreement for the project was signed between the two more than a year ago, formal acquisition of a stake by MEL was subject to specified funding of $2.5 million. This was for meeting initial drilling and exploration expenses.
"MEA has fulfilled its obligations with respect to funding a total of $2.5 million of exploration expenditure on gum flat, and in accordance with the JV agreement is now a 40% participant in the tenement. While LML will meet 60% of the future expenses on the project, MEA will fund the remaining 40%. LML retains the right to operate and manage the project," LML managing director A John Parker said in a statement.
The drilling and exploration work has started on the block, which is estimated to have iron ore reserves of close to 250 million tonnes. So far 25% of the area has been covered and the remaining 75% would require another 1-1.5 years.
"We funded the initial exploration work through internal accruals. The drilling and exploration of iron ore is expected to get over next year following which the mining would begin," said MEL managing director Basant Poddar adding that iron ore would be shipped to India, Japan and China.
The actual reserve after final processing would narrow down to about 100 million tonne and annual production would be 5 million tonnes, he added.
MEL has also doubled its stake in LML to 10.17%. The acquisition of the additional stake makes MEL along with its subsidiary MEA the largest shareholder of Lincoln after Australian mining firm South Cove which holds an 18% stake in the company.
The Indian firm has been extracting iron ore for over four decades and has reserves of around 2.5 million tonnes in South India. It is also eyeing mineral resources such as uranium, manganese, coal and gold in countries such as South Africa, Indonesia and Malaysia.
Source: Economic Times
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