Diversified explorer Cazaly Resources has signed a memorandum of understanding  (MoU) with mining contractor HWE Mining to develop the Parker Range iron-ore project, in Western Australia.

The MoU provided the framework for an engineering, procurement, construction, operation and maintenance (Epcom) model for the mining contracting requirements to deliver ore from the Parker Range project, to the rail head.

It also provided for the coparticipation in the current definitive feasibility study being undertaken at the project, as well as for a defined reference case for the development of the project. 

The agreement further gave HWE the option to acquire a minority joint-venture (JV) interest of up to 20% in the Parker Range project.

“This is a major step forward for the potential development of the Parker Range iron-ore project, as it provides a framework for an Epcom contract which will significantly reduce the capital expenditure requirements of the company,” commented Cazaly MD Nathan McMahon.

He added that an alliance and a potential JV with HWE provided Cazaly with access to one of Australia’s major mining contractors and proposed a complete mine-to-rail solution.

The development of the Parker Range project was conditional upon the completion of a due diligence study, as well as Cazaly receiving an economic allocation of port access with Fremantle Ports, for the export of iron-ore through the Kwinana bulk terminal.

McMahon said that on the assumption that Cazaly could successfully enter into the Epcom and rail haulage contracts, the only outstanding capital requirements would be for the construction of the port facilities and for working capital, which was currently estimated at A$30-million.

“Cazaly is in advanced negotiations with a major international partner who will provide these funds and arrange for offtake of the product.”

Meanwhile, Cazaly has presented a complete and detailed plan to the Fremantle Port Authority for the delivery of up to four-million tons a year of iron-ore to the port of Kwinana, as part of the assessment of potential users of the facility.

The port authority was now conducting an internal review of the port’s capabilities, which would be completed shortly. 

The Parker Range project hosts the Mount Caudan deposit, which has a resource estimate of 28,4-million tons at 55,4% iron. The project was currently undergoing feasibility studies into potentially developing an operation with between two-million tons a year and four-million tons a year capacity.