Forrestania Resources (ASX: FRS) has executed two long-term commercial agreements with MEGA Resources to support Forrestania’s processing hub and regional growth strategy.
The two contracts comprise an Ore Purchase Agreement and a five-year Master Services Agreement. The agreements are intended to strengthen Forrestania’s capacity to source third-party ore for its processing hubs and establish a strategic mining services relationship supporting future activities at Lake Johnston, Edna May and other regional opportunities.
Under the ore purchase agreement, Forrestania has the right to purchase and process up to 2mt of ore across a 24-month period, with campaign-based processing parcels of 50,000-150,000t subject to agreed grade, metallurgical and acceptance criteria.
Under the agreement, MEGA may supply ore to Forrestania, which can elect to process it through either the Lake Johnston or Edna May processing facility. Forrestania will retain ownership of recovered gold and associated minerals.
Payments to MEGA under the agreement will be determined by a commercial pricing formula linked to a baseline of $155/t at an ore grade of 1.43g/t and 91% processing recovery.
Forrestania’s five-year master services agreement establishes a preferred contractual framework for MEGA’s provision of future open-pit mining, drill and blast services, ore and waste movement, site establishment and mobilisation activities, mining support services and additional project-specific mining requirements across the company’s asset portfolio.
The execution of both agreements establishes commercial, operational, safety and governance terms intended to support future mining activities and project development opportunities across Forrestania’s asset base.
FRS executive chairman David Geraghty says the execution of both agreements represents a significant step in advancing the company’s processing hub strategy and restart readiness initiatives.
“The agreement provides a commercial framework to source and process third-party ore through our Lake Johnston and Edna May facilities, whilst the master services agreement establishes a long-term strategic relationship with an experienced mining contractor and provides Forrestania with flexibility and optionality as we progress future mining developments across our portfolio,” he said.
MEGA Resources director Kiran Visireddy says MEGA looks forward to delivering safe, efficient and commercially successful outcomes for both companies.
“These agreements create a framework for a long-term partnership that combines MEGA’s mining and ore supply capabilities with Forrestania’s established processing infrastructure,” he said.
