Just a few months after Venture Minerals (ASX:VMS) announced it was dusting off its shelved iron ore mine, it has secured a supply deal with “one of the largest iron ore traders in the world”.

The news propelled shares up nearly 35 per cent to an intra-day high of 3.1c on Friday morning.

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Venture revealed today that it had inked a binding deal to supply iron ore from its Riley mine to Prosperity Steel United Singapore.

Up until fears of an iron ore shortage began to emerge recently following the disaster in Brazil, Venture was primarily focused on developing its tin project in Tasmania.

But the strengthening iron ore price and increased interest from potential customers prompted Venture to look at restarting its Riley “direct shipping ore” (DSO) mine, which is also in Tasmania and was mothballed in August 2014.

DSO refers to minerals that require only simple crushing before they are exported, which keeps costs low.

The mine, which is fully permitted, is not big but since last December, the benchmark 62 per cent iron ore price has risen almost 40 per cent in US dollar terms, making the project a potential cashbox for the Mt Lindsay tin development.

Prosperity has agreed to buy all of the first two years of production based on reserves of 1.8 million tonnes at 57 per cent iron ore.

“The signing of the off-take agreement with a group of the calibre of Prosperity Steel, has strengthened the likelihood of the Riley iron ore mine moving into production,” managing director Andrew Radonjic said.

Venture now plans to update the mining study, the final step before it will make a final decision to mine.

If the company goes ahead with the restart of the Riley mine, production is slated to begin in the fourth quarter of this year.


In other iron ore news today:

Telecommunications company Vonex (ASX:VN8) is getting a nice chunk of change from an iron ore project in Western Australia. The company is entitled to a 2 per cent royalty from the Koolyanobbing iron ore mine owned by Mineral Resources (ASX:MIN), giving it $282,305 for the March quarter.

Vonex acquired the royalty as part of its reverse takeover of Aleator Resources, formerly known as Golden State Resources, in February 2017. Under the agreement, the company is entitled to up to $3m in royalties.