BC Iron increases Nullagine stake PDF Print E-mail
STAFF REPORTER   
Monday, 10 December 2012 14:56

Fortescue Metals Group is set to divest 25 per cent of its stake in the Nullagine Iron Ore Joint Venture to partner BC Iron for $190 million, forming part of the miner’s strategy to raise funds from the sale of non-core assets.

 

Both companies currently own a 50 per cent interest in the Nullagine project in the Pilbara, with BC Iron expected to gain a further 25 per cent under the proposal, which would come into effect 1 January.

Fortescue and BC Iron have also agreed to increase the available capacity to the Nullagine joint venture on Fortescue’s rail and port infrastructure from the existing 5 million tonnes per annum (mtpa) to 6 mtpa for the life of the joint venture.

The total consideration paid by BC Iron to Fortescue includes a one off prepayment of rail haulage and port charges for 3.5 million wet tonnes of its share of production from the joint venture.

BC Iron managing director Mike Young said the transaction reinforces the on-going relationship between the WA based iron ore miners, with a broadening of that relationship going forward.

“The transaction is in line with our stated priorities to increase our resource base and export tonnes, and is something we have been working on with Fortescue for some time,” he said.

“It represents a low risk opportunity for BC Iron to almost double its annual production by acquiring more of a quality asset that we already operate and know extremely well.”

BC Iron has also agreed to a price participation arrangement from 1 April to 30 September 2014, which will require the company to make payments to Fortescue if the average Platts 62 per cent iron ore index price is more than US$120 ($115) per dry metric tonne in a particular month, payable on BC Iron’s incremental share of production of 158,300 dry tonnes per month.

Fortescue CEO Nev Power said the transaction would enable the miner to partially monetise a non-core asset and continue its commitment as a provider of infrastructure services to third parties.

“This is a fantastic outcome for both parties. It reflects the strong relationship we have established with BC Iron over the years and it forms part of our strategy to divest non-core assets,” he said.

“The funds provide additional liquidity as we consider a restart of the Kings mine at Solomon.”

 

 

Related links:

Fortescue Metals Group

BC Iron



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