Fortescue Metals Group Limited (ASX: FMG) and Strategic Energy Resources Limited (ASX: SER) have announced they are forming a joint venture.

Fortescue Metals Group or FMG is a global leader in the iron ore industry, known for its leading development of world class infrastructure and mining assets in the Pilbara region of Western Australia. Fortescue was founded in 2003 by Andrew Forrest, who is now one of Australia’s wealthiest people. The vast majority of Fortescue’s iron ore, a steel-making ingredient, is shipped and sold to Chinese customers.

What’s Happening With Fortescue?

Fortescue and Strategic Energy Resources have announced a farm-in and joint venture agreement to explore Strategic Energy Resources’ Myall Creek Copper-Gold project in South Australia.

Fortescue will spend $1.5 million on exploration over five years, including a minimum of 1.5km of drilling at Myall Creek to earn an 80% interest in the project.

Fortescue will manage exploration, satisfy all expenditure requirements and keep the tenements, being exploration land zones, in good starting.

After Fortescue has ‘earned in’, a joint venture will be formed under which each party will contribute their required amounts (80% for Fortescue and 20% for Strategic Energy Resources) for further exploration and development or be diluted.

The two miners are targeting iron oxide copper-gold (IOGC) minerals which are present within the project area and overlying sediments include a 15km zone with “anomalous copper in historic drilling”.

Strategic Energy Resources Chairman Stuart Rechner said: “SER welcomes Fortescue joining the Myall Creek Copper-Gold Project, bringing its substantial exploration and technical capability having discovered and developed some of the most significant mines in the world.”

The announcement did say that the Myall Creek tenements lie within the Cultana Training Area, controlled by the Department of Defence. Strategic Energy Resources said it has built a solid relationship with the Defence department over many years and has already been granted access to explore within the training area.

If Fortescue hits the jackpot with this move then I’m sure it would gladly benefit from the gold and copper reserves. However, at this stage it doesn’t amount to much unless something is found.

In any case, I don’t think investing in a cyclical business at the top of the resource price cycle is a good idea. I’d rather invest in the reliable ASX shares revealed in the FREE REPORT below.


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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.