CuFe Sells JWD Mine Iron Ore Rights to Newcam

CuFe Ltd (ASX: CUF) has announced it has entered into a binding term sheet for the disposal of several key assets. This agreement includes the transfer of 100% of its rights, title, and interest in the Iron Ore Rights, along with all associated contracts, authorizations, and permits needed to operate the JWD mine. Additionally, it covers the benefits of all contributions made by CuFe and/or WFE to the rehabilitation fund established for meeting mining rehabilitation obligations at the JWD mine. The agreement also includes the rights, title, and interest in certain iron ore stockpiles, overburden, and waste material located at the JWD mine.

The sale consideration for the transaction is $12 million, comprising a $0.5 million deposit and $11.5 million payable upon completion, which is contingent upon CuFe shareholders' approval. The proceeds will be primarily used to settle trade creditors, though WFE will remain responsible for these obligations. WFE retains rights to certain inventory, existing hedges, and debtors, and will cover costs incurred until completion, some of which will be reimbursed by Newcam post-completion. The final reconciliation of funds will be based on provisional shipments, settled hedges, and costs, with an estimated net inflow to CuFe ranging from $1.5 to $3 million. The JWD mine will suspend operations during the ownership transition to preserve ore value amid challenging iron ore market conditions.

CuFe Executive Director Mark Hancock expressed satisfaction with the agreement to divest the JWD project to Newcam Minerals. He noted that since CuFe began operations at JWD in 2021, the mine has played a key role in funding the acquisition of the company's diverse asset portfolio. Given the volatility in iron ore prices and current levels below breakeven, CuFe aims to shift focus to assets with greater potential for shareholder value creation. Hancock highlighted JWD's logistical challenges, including high haulage costs, which have impacted its cost efficiency. Given these factors and the scale of the mine, he believes transitioning to Newcam's more flexible operational model is the optimal path forward. CuFe looks forward to working with Newcam on the transaction and appreciates the support received during JWD's operations.

WFE, a wholly-owned subsidiary of CuFe Ltd, holds the full rights, title, and interest in the Assets, including the rights to extract iron ore from the JWD deposit near Wiluna in WA. WFE has agreed to sell these rights to Newcam for $12 million in cash. Currently, WFE is responsible for settling JWD trade creditors, totaling approximately $8 million on standard 30-day terms, and about $4 million payable to Newcam for iron ore sales proceeds from material sold on their behalf under a shared shipment arrangement.

Newcam is a privately held mining company with a significant presence in the iron ore industry. The company owns and operates the Mt Gould iron ore mine, which is currently exporting iron ore in partnership with CuFe through the Geraldton Port. Additionally, Newcam leases and manages storage shed 88 at the Geraldton Port, further solidifying its position in the regional mining and logistics landscape.