Fortescue backs first Aboriginal-owned iron ore mine

Cloudbreak iron ore operations. Image: Fortescue Metals Group

Australian Aboriginal Mining Corp (AAMC) is on track to become Australia’s first Indigenous-owned iron ore miner.

AAMC plans to acquire the Wonmunna iron ore project, about 80km from Newman in the Pilbara, from Ascot Resources.

Perth-based AAMC is working with PCF Capital to raise $30–35 million in capital to fund the acquisition, before development of the mine is launched during the third quarter of 2018.

In a landmark agreement with Fortescue Metals Group, AAMC then hopes to start delivering iron ore to the Cloudbreak hub by the fourth quarter of this year under an iron ore sale and purchase agreement.

According to AAMC, the Wonmunna acquisition is the final link in its long-held ambition to create an iron ore mining business owned by Aboriginal people. AAMC believes Wonmunna provides the reserve to mine and deliver iron ore to Fortescue under their agreement.

AAMC has signed a term sheet with Ascot to acquire Wonmunna through a series of cash payments. A formal deal is expected between the two parties next month.

Once the acquisition is completed, AAMC plans to develop Wonmunna as a contract mining operation. It has agreed to engage Carey Mining, an experienced Aboriginal mining contractor owned by AAMC chairman Daniel Tucker.

“AAMC’s proposed development of the Wonmunna iron ore project establishes a milestone for Aboriginal engagement in Australia’s mining industry and should serve as a blueprint for the creation of more Aboriginal-owned mining companies in Australia,” Tucker said.

“This is the future of Aboriginal involvement in the mining industry and will allow the traditional owners of the land to share in the wealth that is generated on their land by becoming owners in projects.”

Tucker said the proposed deal would not have been possible without Fortescue, which would enable AAMC to delver iron ore to market, and Ascot for commercially striking a sensible deal over Wonmunna.

“We now look forward to getting on with the job of securing the necessary funding through PCF followed by the establishment of mining operations at Wonmunna,” Tucker said.

Wonmunna has a JORC-compliant indicated and inferred resource of 84.3Mt at an average grade of 56.5 per cent iron. The resource includes a JORC-compliant reserve of approximately 20Mt grading 59 per cent iron.

The Wonmunna mine is expected to run for at least five years, operating at a rate of 2-5Mt of iron ore annually with life-of-mine production of around 20Mt.

PCF managing director Liam Twigger said the terms governing AAMC’s proposed Wonmunna acquisition and the mine gate deal with Fortescue allowed the fledgling iron ore company to develop a financially robust business with attractive margins at current spot prices, and downside price protection.

“Importantly, the unique nature of the mine gate deal and AAMC’s intention to utilise contract-mining means the capital cost required to begin mining at Wonmunna, relative to other projects, is extremely modest by Pilbara standards but the payback potentially significant,” Twigger said.

“This smart three-way deal will hopefully be a springboard for other similar deals in the Pilbara.”

AAMC expects the Wonmunna project to create 180 jobs during construction and 160 ongoing operational roles.

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