Aim-quoted iron-ore and manganese development company Ferrex has announced plans to begin a drilling pro- gramme at the Malelane iron-ore project, in Mpumalanga, next month.

The group recently inked a deal with an undisclosed contractor for the completion of an eight- to ten-hole diamond drilling programme spanning depths of between 1 200 m and 1 600 m, covering a 3 km strike on the southern banded iron formation adjacent to historic mine workings.

The drilling programme aimed to increase the project’s current inferred resource of 139-million tonnes at 37% iron, while providing details for a planned prefeasibility study of the potential iron-ore operation.

A previous scoping study on the current resource showed “robust economics” for an initial 1.8-million-tonne-a-year openpit, low strip ratio operation with a 57% iron product over a 16.6-year life-of-mine.

“The new drill campaign will be centred on an old ochre mine 6.5 km east of the previous drilling, where there is potential enrichment of the banded iron horizon. Results of the drilling will be used in ongoing studies and to allow flexibility in the mining permit submission,” the company noted in a statement.

The programme had been facilitated by the drilling contractor, which proposed a part equity payment system, owing to the tight capital mar-kets in which Ferrex operated, Ferrex MD Dave Reeves said.

Under the terms of the contract, Ferrex would pay 35% of the drill cost in cash and the remainder in shares based on the invoiced amount divided by the monthly volume-weighted average price in the invoicing month, with the shares to be issued in one tranche upon completion of the drilling programme.

Ferrex expected a total share-based payment of about £110 000.

“We aim to use this as the base case for poten-tial cooperation with the contractor on our other iron-ore and manganese projects in Africa to increase shareholder value with the company’s available funds,” Reeves concluded.