Centrex Metals this morning announced the signing of formal documents for the Bungalow Magnetite Joint Venture with Chinese-company Baotou Iron & Steel.
Under the terms of the agreement, Baotou will pay $40 million over three stages into the Bungalow Joint Venture account to obtain a 50% undivided interest in the iron ore rights.
For an initial 10% interest, the company will pay $8 million within 14 days of the exploration commencement date to cover exploration and study costs.
A further $8 million will be payed to cover exploration and studies in exchange for another 10% in the Joint Venture.
Finally, Baotou will pay the remaining $24 million to fund a bankable feasibility study.
The company will then be assigned a final 30% undivided interest.
According to Centrex, it will manage the exploration stages, while a joint venture company will be established to manage the bankable feasibility study and operations.
The company will also be reimbursed $2.3 million in expenses incurred since the signing of a heads of agreement in September 2007.
The agreements are conditional on receiving Australian and Chinese Government approvals.