MGX Resources is set to exit its Koolan Island iron ore operation, selling to Crestlink for $20.2 million upfront plus potential revenue share, while shifting focus to gold development.
- Sale of Koolan Island operation for $20.2 million plus revenue share
- Crestlink to assume $30 million rehabilitation obligations
- MGX pivots to Central Tanami Gold Project development
- Completion targeted late 2026, subject to FIRB and ACCC approvals
- Strong support from Dambimangari Traditional Owners
MGX Exits Koolan Island, Eyes Gold Ambitions
MGX Resources Limited (ASX:MGX) has struck a conditional deal to sell its Koolan Island iron ore operation to Crestlink Koolan Pty Ltd for $20.2 million upfront and deferred payments, plus a potential revenue share of up to $5 million, indexed to inflation. The transaction signals MGX’s strategic pivot away from iron ore mining towards precious metals, centering on its 50% stake in the Central Tanami Gold Project.
The sale includes MGX’s wholly owned subsidiary holding the Koolan Island assets but excludes various plant and equipment, which MGX plans to redeploy for its gold project. Crestlink, backed by US infrastructure investor Cerberus Capital Management, intends to transform Koolan Island into a multi-user logistics hub supporting mining, aviation, marine, and offshore energy sectors.
Financial Terms and Rehabilitation Burden
The consideration is structured in three cash tranches: $5.2 million on completion, $5 million payable upon receipt of certain non-mining tenure or two years post-completion, and a final $10 million payment less any revenue share already paid by the fifth anniversary of the second tranche. Crestlink will also pay a 1.5% gross revenue share from Koolan Island activities commencing one year after the second tranche until $5 million (plus CPI) is reached.
Crucially, Crestlink assumes responsibility for Koolan Island’s remaining mine rehabilitation obligations, estimated at around $30 million. MGX is currently undertaking substantial earthworks ahead of the handover, including remediation and site closure activities, with completion expected by late 2026 but extendable to March 2027 pending regulatory approvals.
Regulatory Hurdles and Transaction Conditions
The deal is contingent on Foreign Investment Review Board (FIRB) approval and potentially Australian Competition and Consumer Commission (ACCC) clearance. Crestlink holds rights to extend these conditions, indemnifying MGX for ongoing costs capped at $0.5 million monthly. The agreement also allows termination if key infrastructure is damaged or if additional security requirements arise.
MGX will continue operations through July 2026 to complete its low-grade iron ore shipping program before ramping down. Employee redundancies and termination costs remain MGX’s responsibility ahead of completion.
Community Engagement and Regional Impact
The Dambimangari Traditional Owners, represented by the Dambimangari Aboriginal Corporation (DAC), have been integrally involved and supportive of the transaction. MGX and Crestlink have engaged closely with DAC to ensure the deal respects cultural responsibilities and delivers long-term benefits to the Kimberley region.
Gary Umbagai, DAC Chairman, emphasised the importance of protecting Country and fostering ongoing partnerships as Koolan Island transitions to its next chapter. Crestlink’s CEO Eanna Doolin highlighted plans to build on existing relationships and develop the island’s infrastructure for diverse regional uses.
Strategic Shift to Gold Production
MGX CEO Peter Kerr framed the sale as a milestone in the company’s repositioning. With Koolan Island operations drawing to a close, MGX is turning its focus to becoming a new Australian gold producer through the Central Tanami Gold Project, which holds approximately 2.8 million ounces of gold resources. This pivot follows significant challenges at Koolan, including a major rockfall and asset impairments earlier in 2026.
MGX retains control over insurance claims related to the 2025 rockfall incident and will repurpose retained equipment to support its gold ambitions. Completion of the transaction will free capital and management bandwidth for this strategic transition.
Bottom Line?
MGX’s Koolan Island divestment clears the path for its gold-focused future, but regulatory approvals and rehabilitation milestones will shape the timeline and ultimate value.
Questions in the middle?
- Will Crestlink’s logistics hub plans unlock new economic opportunities in the Kimberley region?
- How quickly can MGX ramp up Central Tanami gold development post-Koolan exit?
- What risks remain around rehabilitation costs and regulatory approvals delaying completion?