The Magnum Mining and Exploration Ltd (ASX: MGU) share price is having a woeful time during late Friday afternoon trade.
This follows the mineral mining company's latest announcement in regards to its agreement with Anglo American.
At the time of writing, Magnum shares are down 7.69% to 12 cents apiece. Earlier, the Magnum share price hit a 5-month low of 10.5 cents within the first hour of market open.
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What did Magnum announce?
Investors appear worried about the potential offtake arrangement, selling Magnum shares today. The arrangement would see Magnum sell its entire direct shipping ore from its Buena Vista iron ore project to Anglo American.
According to Magnum's release, both parties have extended the exclusivity period to conduct due diligence for the agreement. As such, the Magnum board does not foresee any impact to production timings should the offtake agreement be reached.
The exclusivity date has been pushed back until 4 November 2021. However, a formal contract is expected to be signed well before.
The term sheet remains unchanged. This includes the right of first refusal to Anglo American for 100% of the offtake volumes. This consists of iron ore concentrate, hot briquetted iron (HBI) and Pig Iron from Phase 2 of the project, as well as financing.
Magnum said it would provide a further update when the formal agreements were complete.
In addition, the company is reviewing other attractive opportunities in the region to increase its resource inventory from adjacent land. It also is working towards a bankable feasibility study to progress the HBI and Pig Iron project.
About the Buena Vista iron ore project
Located in Nevada in the United States, the Buena Vista mine is positioned to become a green steel producer. The term 'green' refers to producing materials from waste products. The mine is also considered a significant magnetite mineral resource that has had $34 million invested in advancing the project.
Additionally, the mine has close access to rail, water, port, and power facilities.
Magnum share price summary
Until recently, a strong 12 months hyped by investor sentiment led the Magnum share price to jump by more than 240%. Year-to-date performance has been just as impressive, with Magnum shares posting gains of more than 120%.
Based on valuation ground, Magnum has a market capitalisation of around $59.5 million, with approximately 496 million shares outstanding.
