Ferrum Crescent exits South Africa in £600 sale

European lead-zinc explorer Ferrum Crescent announced on Monday that it entered into a legally binding agreement for the sale of Batavia, its wholly-owned Mauritian subsidiary which is the investment holding company for all the group's South African assets - including the Moonlight iron ore project in Limpopo Province - to NPSPL Africa Holdings and its BEE partner Ngwenya Capital.

The AIM-traded firm said that, further to its announcement on 27 April regarding its decision to seek to terminate all activities and expenditures in South Africa due to the depressed iron ore market and the project's high capital cost and infrastructure requirements, it acted “swiftly” to identify and secure a suitable purchaser for its South African interests.

For nominal consideration of AUD 1000 (£590), the purchasers acquired Batavia and as such assumed responsibility for all of the company's iron ore assets, its South African subsidiaries and all of the associated corporate, audit, fiscal and environmental responsibilities and costs.

The sale was effective immediately, and the company had given customary undertakings, representations and warranties for an agreement of that nature, the board confirmed.

Ferrum Crescent said the disposal of Batavia was considered to be a more cost effective and expeditious means of withdrawing from the Moonlight Project, rather than pursuing the alternative of an orderly winding-up of the group's Mauritian and South African subsidiaries and relinquishment of the Moonlight Mining Right and prospecting right application to the South African Department of Mineral Resources, with the concomitant requisite actions - including environmental rehabilitation requirements.

As a result, the disposal effectively ended the group's exposure to all of the costs and commitments associated with maintaining the Moonlight Project in good standing and enabled the company to focus its resources on its portfolio of European lead-zinc exploration assets.

“Today's agreement brings to an end our involvement with the Moonlight Project at a time when developing a magnetite iron ore asset of this scale and nature in South Africa has become extremely challenging for foreign companies,” said executive chairman Justin Tooth.

“We shall now continue to maximise and focus our efforts and capital deployment on the development of our Spanish lead-zinc assets where we recently intersected our first near-surface mineralisation.

“I look forward to updating the market with our initial exploration results in due course.”