Shares in Cazaly Resources jumped after the junior iron ore explorer announced the sale of its Parker Range project in Western Australia.

The project is being bought by a major South East Asian investment group for $100 million plus royalties.

Shares in the Perth-based company, which did not reveal the buyer’s identity, were up 20 per cent in early trade.

However, the stock eventually closed up three cents, or 8.6 per cent, at 38 cents.

Based on current iron ore prices, royalties were expected to exceed $80 million, Cazaly said.

The company said it would retain exposure to potential new discoveries and resources at Parker Range by managing ongoing exploration activities for the Asian group.

Each party will contribute half of the exploration costs.

The deal meant a well-funded party would aggressively pursue the development and construction of a mine based on the Mount Caudan resource at Parker Range, while Cazaly would focus on expanding the resources within the greater project area.

“This agreement unlocks and realises the value we’ve created in the Parker Range project for Cazaly shareholders, while allowing Cazaly to retain a share of the exploration upside,” co-managing director Nathan McMahon said in a statement on Thursday.

“We are highly confident the Parker Range project will continue to grow in size and scale, and we are delighted to be partnering development of the project with a major international group.”