The cash payment will be split in two, with an initial $2 million on completion of the deal and a further $29.7 million paid within five years, at interest of 5.8%.

Along with the cash payment, Ascot will issue 88 million fully paid ordinary shares and pay a 1% gross revenue royalty starting 12 months after the first shipment.

It will also take on Ochre’s obligation to pay Talisman Mining a 1% gross revenue royalty starting from the first shipment.

The deal will see Ascot executive chairman Andrew Caruso take on the role of managing director, while Paul Kopejtka will become executive chairman.

Ochre Group director McAndrew Rudisill and executive chairman Nathan Featherby will also join the Ascot board as non-executive directors.

Prior to joining Ascot, Caruso was managing director of iron ore developer Crosslands Resources, and Kopejtka was Murchison’s executive chairman.

Murchison previously held 50% stakes in Crosslands and Oakajee Port and Rail, but sold the assets to Mitsubishi Corporation in 2011.

Ascot had been focusing on Colombian coal.

Before sealing the deal, Ascot will raise at least $10 million through a new placement at 25c a share, with $9.7 million in commitments already secured from sophisticated investors.

Its largest shareholder, Resource Capital Fund V, will also make a further $5 million investment in the company following its due diligence on the project.

The deal is subject to Ascot and Ochre due diligence and shareholder approval.

Prior to completion, Ascot will also seek shareholder approval to consolidate its ordinary share capital on a two-for-one basis.

“The transaction represents an opportunity to combine a quality advanced stage iron ore project in Western Australia’s Pilbara region with a proven management team that has successfully developed greenfield exploration projects into producing assets,” Kopejtka said.

“The proven track record of management in successfully managing and delivering high-quality iron ore projects of similar type will prove invaluable to the development of Wonmunna.

“The acquisition also provides diversification for the company’s existing bulk commodity asset portfolio in Latin America, and complements the company’s objective of pursuing bulk commodities for supply into global steel-making industries.”

Wonmunna is 80km northwest of Newman and hosts 84.3 million tonnes of iron ore at an average 56.5% grade with 64% in the indicated category.

It is also intersected by the Great Northern Highway, providing direct road access to Port Hedland.

Based on existing mine plans, the company is aiming to produce up to 5Mtpa of lump and fines products.

Ascot shares were last trading 28.1% higher at 10c, while Ochre Group Holdings was steady at 4c.