Australia-based iron ore company Mindax has inked a Memorandum of Understanding (MoU) with Hong Kong-based Perpetual Mining Holding Limited (PMHL) to develop Mt Forrest iron project.

As per the agreement, PMHL will acquire 51% interest in projects DSO rights along with 49% magnetite rights by investing A$52m ($54.4m).

The company has an option of acquiring 20% interest in DSO and magnetite rights with an additional investment of A$17m ($17.77m) to assess the feasibility of the DSO component of the project.

Further, the agreement also provides PMHL with a provision under which it can take up remaining share in the project by investing A$35m ($36.6m) during the development stage.

Mindax MD and CEO Steve Ward remarked that the company is keen on working with PMHL to explore the potential of Mt Forrest iron project.

"It allows a logical and manageable incremental development of a major iron-ore project in the Yilgarn iron province, with a long life," added Ward.

Meanwhile, PMHL has been granted exclusivity to undertake due diligence for which it will pay Mindax $250,000 per month for the two months period of due diligence.

"The proposed transaction represents a major step in the evolution of Mindax from an explorer to mining house," noted Ward.