BC Iron, which has a 75% interest in the Nullagine iron-ore joint venture in the Pilbara region of Western Australia, entered into a friendly acquisition agreement with Iron Ore Holdings Ltd. (IOH) in August that values IOH at about A$250 million. As of September 19, BC Iron had acquired a relevant interest in 72.5% of IOH shares.
IOH’s key assets are also in the Pilbara and include its Iron Valley project, which is scheduled to ship its first ore duringthe third quarter of 2014, and its advanced-stage Buckland project in theWest Pilbara.
Assuming BC Iron acquires 100% of IOH, current IOH shareholders will own approximately 36.6% of the combined group. The combined group will have direct shipping ore and channel iron deposit (DSO/CID) ore reserves of 294 million mt grading 58% iron, DSO/CID mineral resources of 626.5 million mt grading 56.8% iron, and magnetite mineral resources of 1.1 billion mt grading 30.4% iron.
BC Iron is the operator of the Nullagine joint venture, which produces about 6 million mt/y of iron ore. Fortescue Metals holds the 25% minority interest and provides rail and port infrastructure and services for the project.
IOH’s Iron Valley project has a mine life of 20 years and is starting up at production capacity of 6 million mt/y, with potential to expand to 10 million mt/y.
IOH’s Buckland project consists of a proposed mine, private haul road, and trans-shipment port at Cape Preston East. IOH announced a positive feasibility study for the project in June that envisages an operation producing and exporting 8 million dry mt/y of about 58% iron fines for more than 15 years. The proposed private haul road and Cape Preston East trans-shipment facility will have capacity to transport additional iron ore products from IOH satellite deposits and third parties, potentially creating an additional revenue stream not included in the announced feasibility study results.