BC Iron Limited has agreed to sell its 75% interest in the Nullagine Joint Venture (NJV) to a subsidiary of Fortescue Metals Group Limited.
The Nullagine mine, which is a 75:25 JV between the two companies, has been idled since December 2015 due to low iron ore prices.
The transaction – subject to the satisfaction of certain conditions – will see Fortescue secure 100% title on the NJV tenements, as well as 75% interest in the iron ore rights over these tenements.
The sale also includes the JV’s existing fixed assets and equipment, the existing low grade stockpiles and all associated mining information.
Under the terms of the agreement, Fortescue will assume BC Iron’s liabilities and obligations, including the existing rehabilitation liability. BC Iron will retain its US$1.5 million debt obligation to Henghou Industries and an obligation to pay A$5.2 million in deferred State Government royalties.
As consideration for the sale, Fortescue will pay BC iron a royalty on 75% of the future iron ore that is mined from the NJV tenements, with 50% reduction in the royalty rate to all iron ore mined above 15 million tonnes, and a 75% reduction for all iron ore mined above 25 million tonnes.
“Nullagine has been a successful operation and BC Iron shareholders gave extracted significant value from it over a number of years,” said BC Iron Chairman, Mr Tony Kiernan.
“BC Iron has now concluded that the sale to Fortescue offers the best potential from a future BC Iron value and risk perspective. We acknowledge the role played by Fortescue who have been on a journey with BC iron from day one at the Nullagine project.”