Despite a prior agreement with Gold Valley, Mineral Resources has swooped in with a bid for Cazaly Resources’ Parker Range iron ore project.

Despite a prior deal with Gold Valley, Mineral Resources (MinRes) (ASX:MIN,OTC Pink:MALRY) has swooped in with a bid for Cazaly Resources’ (ASX:CAZ) Parker Range iron ore project.

In early June, Cazaly entered a conditional agreement with Gold Valley to sell its wholly owned subsidiary, Cazaly Iron, which holds Parker Range’s tenements.

The agreement laid out an initial three month due diligence exclusivity period, but gave Cazaly the right to terminate the plan if a more favorable offer arose.

With the three month mark just a few weeks away, MinRes has now put forward a binding heads of agreement (HOA) proposal for Parker Range. The offer lays out a AU$20 million cash payment, along with a AU$0.50 royalty for each dry metric tonne (dmt) of iron ore extracted and removed from Parker Range after the first 10 million dmt.

According to Cazaly, the fresh offer from MinRes is considered more favorable to both the company and its shareholders. As such, the exclusivity period with Gold Valley has been terminated.

While the agreement with Gold Valley is still in place, Cazaly is now evaluating the offer from MinRes and deciding its next steps going forward. Should Cazaly terminate its agreement with Gold Valley entirely, it will have to pay a AU$250,000 break fee.

The HOA is conditional upon MinRes being satisfied with due diligence investigations at Parker Range, the approval of both companies’ boards and the companies receiving all necessary consents and approvals from government officials, all within 21 days of the agreement’s execution. Additionally, if needed, Cazaly must acquire approval from shareholders to sell the project.

Funds from the potential sale are anticipated to go towards working capital, expanding exploration activities on current projects and seeking new project opportunities.

Gold Valley has not yet publicly responded to the shakeup for its Parker Range bid.

Parker Range hosts a proven and probable ore reserve of 31.4 million tonnes and targets an iron ore fines product that grades 56.4 percent iron, 0.02 percent phosphorus, 6 percent silicon dioxide and 2.5 percent aluminum oxide.

As a convenient perk for MinRes, Parker Range is situated approximately 85 kilometers from the company’s Koolyanobbing iron ore operation in Western Australia’s Yilgarn region.

At the end of trading on Wednesday (August 21), Cazaly’s share price had skyrocketed 80 percent to reach AU$0.045. Meanwhile, MinRes took a small hit when it fell 2.17 percent to close at AU$13.51.

As of 5:06 a.m. EDT on Wednesday, iron ore prices were down 2.18 percent to US$92.01 per tonne.

Don’t forget to follow us @INN_Resource for real-time news updates.

Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

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