Shares in West Perth-based exploration company Forrestania Resources rose by 263 per cent early on Tuesday, following news the company had signed an option to acquire 100 per cent of Netley Minerals.
Shares in West Perth-based exploration company Forrestania Resources rose by 263 per cent early on Tuesday, following news the company had signed an option to acquire 100 per cent of Netley Minerals.
Forrestania was trading at 4.8 cents per share as of 11.53am WST, up 153 per cent.
As part of this transaction, John Hannaford-chaired Forrestania will have access to Netley’s exploration licence and subsequent granted contiguous iron ore exploration licences, which are located across from Mineral Resources’ Koolyanobbing iron ore operations.
The company said the location was telling, given its close proximity to existing MinRes infrastructure – including rail and mine facilities, which could potentially “provide synergies and lowering future capital and operational expenditures”.
Forrestania has agreed to pay an option fee of $20,000 and the option period will last for three months.
The option is able to be exercised at any time by the junior – which can elect to extend it for no cash consideration should approvals for its drilling program not be received within the period – or if they pay an additional $20,000 to the vendors, should any other reason prevail.
During the option period, Forrestania, at its own cost, will conduct a drilling program, with a minimum of 10 reverse circulation holes drilled to a depth of around 90-150m.
Mr Hannaford said the option could provide plenty of upside for the company’s shareholders.
“This is a compelling opportunity to explore for hematite in an ideal location with abundant existing infrastructure,” he said.
“The option allows us to drill-test the targets extensively prior to exercising, so we can validate the significant 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.
“This opportunity provides shareholders with a near term advanced opportunity with significant scale potential.”
In addition to the option fee, Forrestania has also agreed to pay a substantial script consideration to Netley – including 220 million Forrestania shares, along with various listed options and performance rights.
