Red Hill Iron Ore 17c to $4.00 in 12 months !!
Red Hill Iron listed on the ASX in 2005, trading at big volumes and at prices north of $6 per share. The share price then shrunk dramatically on the perception that the Red Hill Iron Ore Joint Venture (RHIOJV) “is a stranded project of modest grade and high impurities”, said chairman Josh Pitt in November.
The modest grade, high impurity part is true, but this project – a JV with Aquila Steel, part of China’s Baosteel Group — is also cheap to mine, and iron ore is booming.
Which leads us to this deal with $11.5 billion market cap MinRes.
Beside the $400m, MinRes will pay Red Hill Iron a royalty of 0.75% of revenue on all iron ore that is extracted and sold from the RHIOJV tenements and — if developed in association with the development of one or more of the RHIOJV tenements — over MinRes’ Bungaroo South tenement.
The sale does not include the other mineral rights over the RHIOJV tenements, which are retained by Red Hill Iron.
The transaction is subject to the approval of Red Hill Iron shareholders, with a vote to be held on 2nd September 2021. The RHI board “strongly recommends” the deal.
“The sale agreement is the culmination of a long process of engagement by which your board has sought to encourage the expedient implementation of a mining operation at Red Hill,” it says.
“To date the RHIOJV parties have been unable to reach agreement on a way forward.
“Our board believes that MinRes can provide the necessary impetus to get a mining operation underway.”
$236 million market cap Red Hill Iron is currently up 2,250% — from 17c to $4 per share – over the past 12 months.
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