QX Resources Free-Carried as Partners Take Majority in Western Shaw Iron Ore
QX Resources has secured a farm-out deal transferring a 75% interest in its Western Shaw iron ore rights, with partners committing $1 million to exploration, while retaining a royalty stream.
- Binding term sheet executed for 75% farm-out at Western Shaw
- Partners to spend minimum $1 million on exploration within 12 months
- QX Resources retains 25% interest free-carried until mining decision
- Royalty of $0.70 per wet metric tonne on first 20 million tonnes
- Previous samples showed iron ore grades up to 58.5% Fe over 4km
Farm-Out Agreement Unlocks Western Shaw Potential
QX Resources Limited (ASX – QXR) has taken a significant step forward in advancing its Western Shaw iron ore project in the Pilbara by entering into a binding term sheet to farm out a 75% interest in the iron ore rights. The deal, struck with Nightrise Nominees Pty Ltd and Kalkam Pty Ltd, transfers majority ownership and exploration responsibilities to partners with proven expertise in iron ore development.
The farm-out arrangement requires the new partners to commit at least $1 million in exploration expenditure within the next 12 months, including a $300,000 minimum spend in the first six months. This financial commitment aims to accelerate the exploration program and unlock the value of the Banded Iron Formation (BIF) identified at Western Shaw, where previous rockchip samples returned iron ore grades as high as 58.5% Fe over a 4-kilometre strike.
Strategic Benefits and Financial Structure
Under the terms, QX Resources will retain a 25% interest in the project, which will be free-carried through to a decision to mine. This means QX Resources will not need to contribute to exploration or development costs until mining is approved, reducing near-term capital requirements and risk exposure. Additionally, QX Resources secures a royalty of $0.70 per wet metric tonne on the first 20 million tonnes produced, which then decreases to $0.05 per tonne thereafter, providing a steady revenue stream if the project advances to production.
Executive Chairman Maurice Feilich expressed confidence in the partnership, highlighting the experience of the new joint venture managers in drilling campaigns and iron ore project development. He emphasized that this collaboration positions Western Shaw for a more rapid and efficient exploration phase, potentially unlocking significant shareholder value.
Looking Ahead – Exploration and Market Implications
The farm-out deal marks a pivotal moment for QX Resources, shifting the project into a new phase with active exploration backed by committed capital. The next 12 months will be critical as the partners undertake drilling and further geological assessment to validate the iron ore potential. Success in these activities could pave the way for a formal mining decision and eventual production, which would transform the asset’s contribution to QX Resources’ portfolio.
Investors will be watching closely to see how the exploration program unfolds and whether the royalty structure translates into meaningful cash flow. The farm-out also mitigates some of the financial risks for QX Resources, allowing the company to focus resources on other strategic initiatives while maintaining upside exposure.
Bottom Line?
QX Resources’ farm-out deal sets the stage for accelerated exploration and potential value creation at Western Shaw, but the path to mining remains contingent on exploration success.
Questions in the middle?
- Will the new partners meet the $1 million exploration expenditure within the stipulated timeframe?
- What further exploration results will confirm the commercial viability of the Western Shaw iron ore deposit?
- How will the royalty terms impact QX Resources’ long-term revenue if mining proceeds?
