Vox Royalty Corp. (TSX-V: VOX) (OTCQX: VOXCF) a returns focused precious metals royalty company, is pleased to announce that it has acquired a producing royalty over the Wonmunna iron ore mine in Western Australia operated by major ASX-listed producer Mineral Resources Limited (ASX: MRL).
The royalty was acquired from an arm’s length, private company for the following consideration: US$4,750,000 in cash, US$12,150,000 in Vox common shares, being 4,350,000 common shares at an issue price of CAD$3.53 per common share and a USD/CAD exchange rate of 1.2618, and 3,600,000 common share purchase warrants with an exercise price of CAD$4.50 and an expiry date of March 25, 2024. The cash portion of the purchase price was fully funded by Vox’s cash on hand. The definitive agreement was executed by Vox and the Vendor on May 26, 2022.
The royalty is a 1.25% – 1.50% sliding scale Gross Revenue Royalty over the Wonmunna mine, with 1.25% GRR payable when benchmark 62% iron ore price is below A$100/tonne and 1.50% GRR payable when the iron ore price is above A$100/tonne, which covers the full extent of Wonmunna. Wonmunna commenced production in April 2021 and is currently producing at a rate of ~5Mtpa of iron ore, with all approvals received to expand production up to 10Mtpa. Notwithstanding the closing date of the Transaction, all royalty payments due and payable to the holder of the Royalty will be for the benefit of Vox as of April 1, 2022.
Kyle Floyd, Chief Executive Officer stated: “The Wonmunna royalty acquisition further expands the revenue and growth profile of Vox and is accretive on all key metrics. The opportunity to add significant, immediate, incremental revenue through a non-brokered accretive transaction with a private seller generates significant value for Vox shareholders for years to come. We are also excited to increase our exposure to an A$11 billion market cap, best-in-class operator, who we know well as the operator of our producing Koolyanobbing royalty asset. We are also pleased to share revenue guidance of C$10M – C$12M for 2022, more than double Vox’s 2021 realized revenues, which reflects the ongoing embedded growth in Vox’s royalty portfolio.”
Asset Overview – Wonmunna Mine(1)(2)
Wonmunna is located approximately 70km west-northwest of Newman in the Pilbara region of Western Australia. The mine is located within the Hamersley Ranges which has a long mining history. The mine is located within 25 kilometres of operating mines; Hope Downs (Rio Tinto/Hancock JV), Area C (BHP) and West Angelas (Rio Tinto). The northern boundary of tenement M47/1425 abuts the Great Northern Highway.
The Wonmunna mine involves the extraction of high-grade iron ore from the three Marra Mamba deposits across multiple shallow open pits (20m – 50m depth), commencing at the western end of the North Marra Mamba deposit. The mine plan and throughputs are based on an average grade of 57.5% Iron and production of 3Mtpa of ore was achieved in 2021, ramping to +5Mtpa in 2022 onwards.
Leveraging MinRes’ miner/contractor integrated model, the mine was developed ahead of schedule and under budget over a 5-month development period at a total capital cost of A$126 million. Drilling and blasting is used in the mining of the ore and overburden, with conventional mining excavators and mine trucks hauling the ore from the pits to the crushing and screening plant.
On site processing is limited to dry crushing and blending according to market requirements. The mine has been developed for the export iron ore market, although some mine gate sales may be considered in the future. Export product is hauled to the MinRes-operated Utah Point bulk port facility the Port Hedland port via road trains on the Great Northern Highway. There are no pastoral leases over the mining tenements.
Wonmunna Resource Estimate as at 18 March 2014(2)
The Wonmunna mine comprises four deposits, NMM, Central Marra Mamba, South Marra Mamba and East Marra Mamba, covered by mining leases M47/1423-1425. The mining leases are contained within exploration licence (E47/1137), which covers an area of ~230 square kms. All of the project tenements are beneficially owned by a wholly owned subsidiary of MinRes.
Both the NMM and CMM deposits have generally simple geometry, with mineralised zones and boundaries that are clearly defined for the purposes of grade control and overall management of product quality. The mine has a low stripping ratio of approximately 1.3:1 tonnes of waste per tonne of ore over the forecast life of the mine.
A variable cut-off grade policy between 52% Fe to 54% Fe was used to define ore, with material between 50% Fe and the pit cut-off to be stockpiled as a potential future low-grade product or for potential beneficiation. The cut-off grade is applied after dilution and is selected based primarily on achieving an ore product of 58% Fe with marketable chemical and physical characteristics.
Wonmunna Reserve Estimate as at 6 January 2015(2)
On January 6, 2015, Ascot Resources Limited defined a maiden Ore Reserve estimate derived from the ‘Indicated Resource’ estimate within the larger Mineral Resource estimate for the NMM and CMM deposits. The total Indicated Mineral Resource estimate (@ 50% Fe Cut-off grade) for these deposits is 54.1Mt @ 57.1% Fe. The estimated ore tonnage is contained predominantly within the Mt Newman member of the Marra Mamba Iron Formation (MMIF), and therefore exhibits mineralogical characteristics that are similar to the orebody currently mined at the neighbouring West Angelas operation managed by Rio Tinto Iron Ore.
In addition to the current JORC-2012 compliant Mineral Reserve estimate summarised in Table 2 below, MinRes submitted a Mining Proposal for Small Mining Operations to the DMIRS Environment Department dated March 25, 2021(3), seeking approval to increase the processing capacity at Wonmunna from 5Mtpa up to a maximum of 10Mtpa. This processing increase was planned to be achieved through mining multiple pit stages concurrently and increasing the project’s Ore Handling Plant’s crushing and screening capacity through installation of a lump re-screening facility within the approved footprint on mining lease M47/1424.
The proposed initial mine life included in the March 2021 Mining Proposal was “30Mt over 4 years to 2025” with a “potential increase in total inventory of 50 – 60Mt up to 2028”, which supports Vox management’s confidence around a mine life to 2028 and potentially beyond. MinRes reported in April 2021 that they were carrying out ~12,000m of resource definition drilling at Wonmunna, supporting resource to reserve conversion.
2022 Revenue Outlook
In 2022, Vox estimates royalty revenues to total C$10,000,000 – C$12,000,000. The Company expects revenues to be weighted towards the second half of the year across multiple operations in Western Australia, following expanded production from the Janet Ivy gold mine in the second half of 2022, first ore production from the Otto Bore gold mine, and potential toll-treatment from the Bulong gold royalty later in 2022.
The Transaction is subject to the final acceptance of the TSX Venture Exchange.
Timothy J. Strong, MIMMM, of Kangari Consulting LLC and a “Qualified Person” under National Instrument 43-101 – Standards of Disclosure for Mineral Projects, has reviewed and approved the scientific and technical disclosure contained in this press release.
Vox is a returns focused precious metals royalty company with a portfolio of over 50 royalties and streams spanning eight jurisdictions. The Company was established in 2014 and has since built unique intellectual property, a technically focused transactional team and a global sourcing network which has allowed Vox to target the highest risk-adjusted returns in the mining royalty sector. Since the beginning of 2020, Vox has announced over 20 separate transactions to acquire over 45 royalties.
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