Matsa Resources has announced an important development in its strategy to develop its Dundas Iron Ore Project following agreement with Haina Resources Pty Limited, a subsidiary of Haina International Trading HK Limited, a controlled entity of Shandong Shanshi International Trading Co Limited that paves the way for a Formal Agreement.

Mr Paul Poli executive chairman of Matsa said that "The terms sheet with Haina an important milestone in the company's on going commitment to develop its Dundas Iron Ore Project for shareholder benefit. We are only interested in partnering with potential investors with capacity to develop our projects and this agreement with Haina provides a range of development options to fast track Dundas Iron Ore into production."

The agreement with Haina provides Matsa with the means to develop our Dundas Iron Ore Project. The information that can be gathered with the feasibility will also substantially assist Matsa in developing the Norseman Gold Magnetite by product project.

Key features of the agreement between Matsa and Haina include:

Haina to take a placement of 4 million shares at a minimum of 26 cents in Matsa, with the first tranche of USD 286,000 already received

90 day Due Diligence period to commence immediately in which the Formal Agreement is to be finalized

Haina to pay USD 1.95 million to Matsa upon successful completion of stage 2 of the proposed evaluation study which is to commence within 90 days

Range of flexible development options, including Haina to spend USD 7 million on exploration and evaluation costs within 18 months of Formal Agreement, or transfer USD 7 million to Matsa for exploration and evaluation purposes to earn 60% of the project. Matsa will manage the evaluation study at all times

Haina to fund and complete an approximate USD 20 million Feasibility Study within 2 years after completion of the evaluation study to increase its interest to 76%

Haina to fund up to commencement of production to earn a maximum of 80% in the project, with Matsa's share being free carried

Mr Poli said that "As always, all discussions with potential investors are aimed at getting the best possible outcome for our shareholders, and Haina agrees with Matsa that the Dundas Iron Ore Project has significant upside potential with the opportunity to generate strong cash flows. Despite the turmoil on international and local markets and knock on effects to commodity prices we remain confident that demand for iron ore will continue to be high."

source:steel guru