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MGX RESOURCES LIMITED Capital/Financing Update 2005
65331_rns_2005-05-04_23c913ab-6ed6-459b-9bae-861f3dc75d40.pdf
Capital/Financing Update
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Mount Gibson Iron Limited ABN 87 008 670 817
First Floor, 7 Havelock Street West Perth 6005, Western Australia
PO Box 55, West Perth WA 6872
Telephone: 61-8-9485 2355 Facsimile: 61-8-9485 2305 E-mail: [email protected]
No. Pages = $3$
5 May 2005
VIA: WWW.ASX.ONLINE.COM
The Manager Company Announcements Australian Stock Exchange Limited Level 10, 20 Bond Street SYDNEY NSW 2000
SUBJECT: MOUNT GIBSON IRON FARMS INTO EXTENSIVE PILBARA EXPLORATION AREAS
Mount Gibson Iron Limited (ASX Code "MGX") advises that it has entered into a farm-in arrangement with Poondano Exploration Pty Ltd ("Poondano") to earn a 60% interest in Poondano's 2.730km2 of exploration areas in the Pilbara region of Western Australia.
The privately owned exploration company's areas are prospective for major buried pisolite iron deposits similar to those being mined at Yandi by BHP Billiton, and at both Yandicoogina and Pannawonica by Rio Tinto.
Poondano's prospects were generated using geological and stratigraphical theories which assist in identifying these deposits when they are buried and undetectable by most remote sensing methods. All of the prospects are located within close proximity to existing and planned infrastructure.
Mount Gibson Iron will earn a 60% shareholding in Poondano by spending \$1.4 million on an exploration program over the next eighteen months. Relatively inexpensive wide spaced drilling of the shallow deposits will commence in June 2005 and be carried out over the next two winter periods.
The five prospects (refer attached map) are currently rated in the following order for commercial potential and therefore drilling priority:
| PROSPECT | AREA KM 2 | LOCATION |
|---|---|---|
| South Fortescue | 1,040 | Adjacent to Hamersley Iron railway and centrally between Marandoo, Tom Price and Mt Brockman mines |
| Margaret Well | 330 | Adjacent to BHP-Billiton railway and 30 km from Mt Whaleback mine. |
| Wonnmunna | 200 | 20 km from Hamersley Iron's railway and centrally between West Angelas mine and proposed Hope Downs mine. |
| Resolution Well | 965 | 70 km from proposed Hope Downs mine and railway |
| Bukardi Well | 195 | 70 km from proposed Hope Downs mine and railway |
The majority of drilling in the current program (2,400 m) will be focused on the South Fortescue, Margaret Well and Wonnmunna prospects.
Poondano's Managing Director and founding shareholder. Mr Peter Schwann, is an experienced iron ore geologist, as is Mr Bill Willis, another founding shareholder and director, and Chairman of Mount Gibson Iron Limited. In compliance with Mount Gibson Iron's corporate governance practices, Mr Willis absented himself from all directors' meetings at which the farm-in with Poondano was discussed.
Mr Brian Johnson, Managing Director of Mount Gibson Iron, said that he was hopeful that commercial pisolite iron deposits would be identified which could be developed in association with existing infrastructure owners.
Mount Gibson Iron's aim is to look for continuity of production of direct shipping grade iron ore bevond the 11 years expected from the current Tallering Peak operation (6 years) and the subsequent Mt Gibson operation (5 years).
In any event, the Company's focus on manufacturing iron pellets in China based on feed from the Group's extensive magnetite deposits in the Mid West region of Western Australia is expected to yield strong long term earnings commencing early 2007.
Yours sincerely. MOUNT GIBSON IRON LIMITED
$\mathscr{D}$
Angela Dent Company Secretary
Enquiries: Mr Brian Johnson Managing Director Telephone: 61 8 9485 2355 Email: [email protected]
