Communicators

FEL to acquire highly prospective lithium projects in Pilbara region of Western Australia - $400,000 placement

Highlights:

-            Fe Limited agrees to acquire over 360sqkm of highly prospective lithium tenements across 2 project areas in the Pilbara region of Western Australia - one of the world’s emerging lithium provinces

-            The Pilbara is one of the world’s leading hard rock lithium provinces following the discovery and development of mines at Pilgangoora by Pilbara Minerals Limited (ASX: PLS) and Altura Mining Limited (ASX: AJM). A new potential lithium discovery by Fortescue Metals Group Limited (ASX: FMG) further enhances the region’s standing

-            The first project area is located at Pippingarra in the Tabba Tabba region near Port Hedland and along a fault paralleling the main Tabba Tabba structure which hosts a potential new lithium discovery by Fortescue (Pippingarra Lithium Project)

-            The second project area is located near Marble Bar (Marble Bar Lithium Project) and contains a Lithium (Spodumene and Lepidolite) bearing pegmatite swarm, with a strike length of 3.5km (within a 4km wide corridor)

-            Sampling has returned an assay high of 3.72% Li2O, with an average of 1.85% Li2O and limited first pass drilling has identified very encouraging results including best intercepts of 14m @ 0.58% Li2O from 0 to 14m including a higher grade interval of 3m @ 1.48% Li2O from 8m

-            Comprehensive exploration program to commence immediately the transaction is completed

-            Firm commitments received for $400,000 placement at $0.02 per share

Fe Limited (ASX: FEL) (FEL or the Company) is pleased to announce that it has entered into an agreement (Acquisition Agreement) to acquire the Pippingarra Lithium Project and the Marble Bar Lithium Project (Project) from Mercury Resources Group Pty Ltd (an unrelated private exploration and mining group) (Mercury) for  FEL shares, 15 million FEL options, a 1% net smelter royalty and $200,000 in cash payable in instalments.  See below for details.

The Company has also received firm commitments for a placement to raise $400,000 through the issue of fully paid ordinary FEL shares (Placement Shares) at an issue price of $0.02 per Share, with one unlisted option for every two Placement Shares issued at an exercise price of $0.03 each expiring 2 years from date of issue (Options) (Placement).  The issue will be made to unrelated parties and without shareholder approval; using the Company’s existing capacity under Listing Rule 7.1 (for the Options) and 7.1A (for the Placement Shares). To date $200,000 has been received under the Placement, with the Placement securites to be issued once the balance of the funds are received.

The Company intends to use proceeds from the Placement for working capital.

Figure 1: Project location map

PIPPINGARRA LITHIUM PROJECT

The Pippingarra Lithium and Tantalite project consists of two granted Exploration Licences (E45/4691 and E45/4759) covering 181 km2 strategically located 27kms south east of Port Hedland. Port Hedland is one of the largest and most significant commodity export ports in the world.

Figure 2: Pippingarra Lithium Project tenement location map and geology

The tenements share similar geology and are adjacent to the recent potential lithium discovery by Fortescue Metals Group (ASX:FMG) at Tabba. Fortescue have recently pegged a mining lease and are conducting extensive exploration and drilling in the area.

The Pippingarra Lithium Project is highly prospective for pegmatite hosted lithium and tantalite mineralization and contains tantalite occurrences at the excised Pippingarra quarry (Northwest Quarries) and Bore Creek prospect.  There is no reported lithium exploration on these prospects even though the Pippingarra pegmatite is described as one of the largest granite hosted mineralized pegmatites in the Pilbara.

The tenements are underlain by a large area of the Archaean Strelley Granite rimmed by sediments and volcanics of the Mallina Formation and the Louden Volcanics.  The project also contains a regional north-east trending structure sub-paralleling the nearby Tabba Shear which hosts the Tabba Tabba tantalite deposits and historical mining centre. 

The tenements surround the excised Pippingarra quarry which was recently mined for feldspar and muscovite contained within a large pegmatite body.  A small tantalite, columbite, beryl mine also operated within the excised tenements in the 1950-1960’s.  In the south west corner of the tenement the Bore Creek alluvial tantalite prospect occurs. Extensive areas of prospective pegmatite occur within the project area. The Company will commence a thorough exploration program once the transaction has completed.

MARBLE BAR LITHIUM PROJECT

The Marble Bar Lithium Project consists of four (4) granted Exploration Licences  (EL 45/4669, 45/4690, 45/4724 and 45/4746) covering 186kms located between 10 and 20 kilometres East of Marble Bar in the East Pilbara region of Western Australia (see Figure 1). Marble Bar is located approximately 200km south east of Port Hedland.

Figure 3: Marble Bar Lithium Project tenement geology and location map within the East Pilbara

Reconnaissance exploration in 2016 by well-known prospectors Denis O’Meara and Brian Richardson discovered new lithium bearing pegmatite swarms at the project with a strike length of 3.5km within a 4.0km wide corridor. Individual pegmatites were traced for up to 1km in outcrop with widths between 5 and 15m.  Spodumene and Lepidolite mineralisation associated with the pegmatites has been identified within this corridor. Rock chip sampling returned peak values of 3.72% Li2O and 3.32% Li2O with an average of 1.85% Li2O across the 22 samples (see Table 1 for a complete listing of rock chip samples). Details of sampling methods and assay results are presented in Blaze International Limited’s (BLZ) ASX release of 2 August 2016.

Figure 4: Typical spodumene rich lithium pegmatite – Marble Bar Lithium Project

Figure 5: Drilling at the Marble Bar Lithium Project

In November 2016, Blaze International conducted a limited shallow 12 hole, 702m RC drilling program targeting only 3 of the known mineralised pegmatites. Drilling returned significant lithium results within broad low grade zones of mineralisation, and lithium was intercepted in most holes with 7 holes also containing narrow but higher grade zones.  Hole MBRS006 returned one of the best intercepts of 14m @ 0.58% Li2O from 0 to14m including a higher grade interval of 3m @ 1.48% Li2O from 8m. 

The drilling confirmed the shallow 30-35 degree easterly dip to the pegmatites and also indicated that the pegmatites are often associated with broad mineralized alteration haloes indicating a large and pervasive mineralizing event (see Tables 1 and 2 below for details). These drill results are significant for a first pass drilling campaign into a new spodumene rich pegmatite field in the Pilbara and warrant further work being undertaken.

The majority of the project area remains under explored. Systematic exploration will be conducted to identify any additional Lithium bearing pegmatites within the defined corridor and elsewhere in the Project area.

Figure 6: Marble Bar Lithium Project - drill hole and rock sample locations (with intercepts and assay results).

Table 1: Marble Bar Lithium Project Rock Chip Sample and Drilling Summary

Table 2: Marble Bar Lithium Project - Significant 2016 Drill Intercepts (E45/4669)

Figure 7: Spodumene rich pegmatites

MARBLE BAR LITHIUM PROJECT’S REGIONAL GEOLOGY

The project is underlain by granites and gneisses of the Mount Edgar Batholith, an early Archaean granitic complex composed of gneisses, granite, mafic enclaves and granitic pegmatites, which is surrounded by a deformed association of ultramafic, mafic and felsic rocks of the Warrawoona Group. The Moolyella Adamellite, a late Archaean (young) granite intrusion believed to be the ultimate source of all the Sn-Ta-Li in the district, occurs 5.0km to the east of EL 45/4669.

The Western tenements of the Marble Bar Lithium Project (EL45/4699 and EL45/4724) are adjacent to the Moolyella tin field, which was one of Western Australia’s largest tin producers, with ~7,600 tonnes of tin in concentrate produced between 1899 and 1975 from predominantly alluvial and shallow elluvial deposits. Primary tin mineralisation at Moolyella occurs in swarms of northerly striking, easterly dipping thin pegmatite dykes that occur within close proximity to the Moolyella Adamellite.

The pegmatites mapped within EL45/4699 parallel the swarm of tin bearing pegmatites at Moolyella, with the fractionation of the pegmatite melt originating from the Moolyella Adamellite intrusion resulting in an enrichment of lithium in the pegmatites within the Project area.

Chairman Tony Sage says: “We are very excited about this project especially considering the surrounding lithium deposits which has made this region one of the hottest in the electronic battery space.”

ACQUISITION TERMS

The key terms of the Acquisition Agreement are as follows:

1.      The consideration payable is:

1. 15,000,000 fully paid ordinary shares in the capital of FEL (Consideration Shares), issued upon the Vendor Placement Condition (as defined below) being satisfied and subject to 6 months voluntary escrow from issue;

2. 15,000,000 unlisted options with an exercise price of $0.025 and expiring 31 March 2022; to be issued at completion and subject to prior FEL shareholder approval;

3. Ordinary shares with a total value of $250,000 (using an issue price equal to the Shares’ 5 day VWAP) upon FEL announcing a JORC Resource of 50,000,000 tonnes @ 1% Li20 within 24 months from completion; to be issued subject to prior shareholder approval;

4. $200,000 in cash payable in instalments of $50,000 upon the Vendor Placement Condition being satisfied, $50,000 at completion and $100,000 upon the Company raising $2m through a share issue (excluding funds raised in satisfaction of the Vendor Placement Condition).

5. A 1% net smelter royalty on revenue from the sale of minerals from the Tenements.

2.      Completion is conditional upon the following occurring before 30 June 2019:

1. FEL’s shareholders approving the issue of securities under the Acquisition Agreement (being those securities referred to at 1(b) and 1(c) above).

2. FEL receiving written confirmation from ASX that completion of the purchase under the Acquisition Agreement does not require re-compliance with Chapters 1 and 2 of the Listing Rules.

3. FEL completing due diligence to its satisfaction (including as to title of the Tenements).

4. There being no material adverse change in the Tenements, or any event reasonably likely to result in such a material adverse change.

5. There is no material breach, and there are no facts or circumstances that may reasonably be expected to lead to a material breach, of any Warranties before Completion.

6. Mercury procuring any consents or waivers to the Acquisition Agreement as may be required under any third party agreements.

7. FEL raising, by no later than 15 days after the date of the Acquisition Agreement, $400,000 through the issue of ordinary shares at an issue price of $0.02 per share, with one unlisted option for every two shares issued at an exercise price of $0.03 each expiring 2 years from date of issue, from persons nominated by Mercury (Vendor Placement Condition).  The Placement referred to above in this announcement does not satisfy this condition.

3.      FEL will appoint a consultant nominated by Mercury for 12 months with remuneration of $5,000 per month.  The consultant will assist FEL with negotiating native title arrangements, potential offtake arrangements with existing Pilbara lithium producers and potential customers in the event that a resource is defined under the JORC Code.

The 15 million Consideration Shares issued upon satisfaction of the Vendor Placement Condition are issued within FEL’s 15% capacity under Listing Rule 7.1 and shareholder approval will not be sought for the issue.  The issue of the remaining securities is subject to prior shareholder approval.

LISTING RULE 3.10.5A DISCLOSURES

In respect of the Placement, for the purposes of Listing Rule 3.10.5A, the Company provides the following information:

1.      Existing shareholders will be diluted by 5.35% as a result of the issue of Placement Shares;

2.      The Company’s directors elected to issue Placement Shares through a placement to sophisticated and professional investors as this was considered to be the most efficient mechanism for raising funds at a price equal to the Company’s prevailing share price on ASX.

3.      The issue was not underwritten.

4.      A 6% fee (in cash or, subject to the Listing Rules, Shares) will be payable in relation to the Placement.

Yours faithfully

FE LIMITED

Tony Sage

Non-Executive Chairman

Contact:

www.felimited.com.au

32 Harrogate St, West Leederville

Western Australia 6007 Australia

Telephone  +61 8 6181 9793

Email    info@felimited.com.au

Fe Limited is an Australian domiciled mineral resources exploration and development company.

END

COMPETENT PERSON

The information in this report that relates to Exploration Results is based on information compiled by Brian Richardson, a Competent Person who is a Member or Fellow of the Australasian Institute of Mining and Metallurgy.  Mr Richardson is a consultant retained by Mercury Resources Group Pty Ltd, the vendor of the tenements the subject of this announcement.  Mr Richardson has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Richardson consents to the inclusion in the report of the matters based on his (or her) information in the form and context in which it appears.