The deal now gives Japanese trading house Sojitz a 30% stake in the entire Southdown project, adding to royalties Sojitz will need to pay to Grange.
The area is not expected to supply ore until the initial 20-25 years of production from the western end of the deposit is exhausted.
Under the terms of the deal Grange will spend at least 80% of the funds on its share of the feasibility study into the magnetite project in southern Western Australia.
Grange also said today its merger with Australian Bulk Minerals would be unaffected by the deal with Sojitz, save the additional royalty payments in future.
The merged entity will continue to hold 70% of the project and Sojitz will still retain 30%.
The company is targeting production of around 7.7 million tonnes per annum of pellets and 80,000tpa concentrate by 2012-13 from the $US1.6 billion Southdown development.
The merger between Grange and ABM was announced last week and will see Chinese interests own a majority of the new entity.
Grange is spending $3.5 million on drilling at Southdown to bring the probable ore reserves up to the proven category, while Standard Chartered Bank has been appointed as financial advisor to help Grange and Sojitz secure project finding next year.
Shares in Perth-based Grange were last trading at $1.20, after falling a further 13c or 10% this morning - bringing its falls since announcing the merger to 70c or more than 36%.
