LONDON (ShareCast) - Iron ore producer Ferrex has said that it will start a drilling programme of up to 10 holes next month at the Malelane project in South Africa.

The 1.2-1.6km programme is aimed to increase and "prove up" the resource estimates of the project, which currently stand at an inferred resource of 139m tonnes at 37% iron (Fe).

Ferrex said that its findings will help it to plan a pre-feasibility study for the project.

The company will pay for the drilling using 35% cash and the rest in shares. Total share-based payments are expected to total £110,000.

Ferrex's Managing Direct Dave Reeves said the drilling "should see us increase the resource at this project where the previously completed scoping study showed positive economic results".

He said that the company intends to use the proposed payment system as the base case for potential co-operation with the contractor on its other iron ore and manganese projects in Africa "to maximise shareholder value with the company's available funds".

The stock was down 1.5% at 1.7p in afternoon trade on Tuesday.

BC

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