Macro (ASX:M4M) takes flight in Pilbara with Firebird manganese, mining services missions

Macro Metals has launched a mining services division as it enters a binding agreement with Firebird Metals to acquire 80 per cent of three manganese assets with near-term potential in the Eastern Pilbara region of Western Australia.

The deal will cover assets at Wandanya, Disraeli, and Midgengadge, with the former in particular showing potential to deliver high-grade direct shipping ore into an ascendant market.

Macro will have to pay a minimum aggregate expenditure of $150,000 across the three within a year of completion, with a minimum 10 holes at 100 metres drilled in total to be included within.

Firebird will get a free 20% carry on each project through to a finished project execution plan including a high-level mine plan and capital/operating budget estimates and a decision to mine from Macro.

Macro will be fully responsible for the tenements, and on a decision to mine, while Firebird can either retain its 20% stake or form an incorporated special-purpose-vehicle joint venture on an 80:20 split or convert its interest into a 1% free-on-board royalty.

Under the deal, the venture must appoint Macro’s newly established services decision, Macro Mining Services, as operator of all mining to be conducted over the life of the mine.

There is an existing overlap between the pair, with Evan Cranston standing as director of both, and Macro directors Tolga Kumova, Robert Jewson, and Evan Cranston already holding a relevant interest in Firebird.

And while fast-tracking Pilbara iron assets at Cane Bore, Goldsworthy East and a new focus at Turner will remain squarely on the agenda, Macro likely saw the deal as an intriguing offer of scaling up its operations.

Macro Metals Managing Director Simon Rushton said he was very pleased to have negotiated his company’s first joint venture and launched the service division.

“My aim is to build core project development, construction and operational teams within Macro supported by an appropriately resourced corporate team,” he said.

“There is a minimum overhead required regardless of whether you are supporting one operation or several and the key to being sustainable through the commodity cycles is to get the unit cost of support and operational services down as quickly as possible.”

Rushton noted that by providing services to third parties, Macro can crucially scale its teams quicker, providing more resources, a wider array of skill and experience, and sooner offerings of redundancy and flexibility.

He said the company will look to take organic mining service revenue and the 80% profit share from the deal reinvesting into iron ore projects, the services division, and potentially a manganese beneficiation operation.

“I wish to extend my thanks to (Firebird Managing Director Peter Allen) and the team at Firebird for an enjoyable and respectful negotiation process between our two companies,” Rushton added.

He believed the deal should provide meaningful value for both companies’ shareholders, and the focus was now on completing due diligence and getting the projects evaluated and unlocked as quickly as possible.

“From a Macro shareholder perspective, to negotiate an 80% interest in three potentially high-quality DSO manganese projects and look to fast-track their development in the current favourable manganese market was opportunistic but too good to look past,” Rushton said.

He said that while it was a divergence from iron, it was still very much a Pilbara focus, and the direct shipping ore factor was very similar, if not identical, to multiple facets of an iron ore operation.

“MMS providing these mining services will certainly not distract from the wider Macro technical services team’s focus on fast-tracking Cane Bore, Turner and Goldsworthy East,” Rushton said.

Wandanya and multiple significant drill results up to the tune of 13m at 23.6% manganese from 1m at the Donkey prospect is the standout for development.

Other prospects there have also returned high-grade rock chips up to 55.3 and 54.55% manganese, with other projects at Disraeli and Midgengadge have showing similarly high-grade rock results.

The deal has been approved by Macro’s independent directors, and due diligence will now be carried out until a tentative date of September 30, 2024 before completion.

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