African Barrick Gold strikes deal on iron ore

FTSE250 miner African Barrick Gold (ABG) has announced a deal allowing another firm to explore for iron ore at its sites in Tanzania.

The agreement allows for Liontown Resources to earn an interest of up to 70% of the iron ore rights on around 530km2 of land within four sites.

ABG, Tanzania's largest gold miner, said it would retain all rights to minerals discovered other than iron ore and by-products directly associated with iron ore mineralogy.

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"This agreement provides ABG with the upside from potential iron ore mineralization on these exploration tenements, while also ensuring under the agreement that Liontown samples and assays for gold, the rights for which are retained by ABG," the firm said.

Under the agreement there will be an initial 6-month data review period to assess the available technical data to determine whether there is potential fo significant iron ore mineralisation within the properties.

At the end of this Stage, Liontown will be able to either define smaller project areas for further iron ore exploration or withdraw from the agreement.

Following the Assessment Stage, Liontown can earn 60% equity in any iron ore discovery within the project areas by spending $10m within four years on exploration and resource definition.

This can be increased to 70% by Lionsgate spending an additional $10 million over a further 2-year period.

Liontown must spend $500,000 during the Initial Earn-In Stage before having right to withdraw from the agreement with ABG.