BC Iron eyeing Pilbara mine assets

BC Iron is looking to grow and the company’s chief is eyeing good deals in the Pilbara as iron ore prices fall.

Morgan Ball said companies were keener than ever to sell their assets to BC Iron, and as the company will soon be in a net cash position, he predicts that will continue.

He also predicted troubled sales in the Pilbara will rise as his company was simultaneously looking at several projects, Perth Now reported.

“As we’ve started to talk to people in the last 24 months, some of the price expectations have been ludicrous and we’ve quite comfortably walked away,” he said.

“The market is such (now) that they may consider more pragmatic deals than they had a few years ago.”

Company chairman Tony Kiernan agreed and said many companies would crumble as they compiled their 2012-13 balance sheets and would look to companies like BC Iron for assistance.

Mining giant BHP Billiton announced last week it is selling a 15 per cent stake in its Australian Jimblebar iron ore mine to two Japanese trading firms for about $1.5 billion.

Ball called it an ‘interesting time’ in the Pilbara, particularly as Gina Rinehart’s rail and port infrastructure for her $9 billion Roy Hill project is being built.

“You have the TPI (The Pilbara Infrastructure) sale, you have the Brockman access (deal with Fortescue Metals Group), you have Iron Ore Holdings looking at trans-shopping options.

“So there does remain a number of stranded deposits in the Pilbara that I would like our guys to revisit because I don’t think we’ve looked as hard as we’d liked.”

Fortescue's Infrastructure arm drew anger from Flinders mines last week for being secretive over its costing details.

Flinders made a submission to the Economic Regulation Authority saying TPI's 'lack of transparency' meant challenging its costing structures was difficult.

Fortescue downgraded its iron ore targets last week and postponed its asset sales and said the company would make quick and permanent reductions to operation costs to strengthen its financial situation.

Full year shipped iron ore is expected to reach between 80 to 82 million wet metric tonnes, down from forecasts of 82 to 84 million tonnes.

While Pilbara is top preference, Ball said he was open to greenfield projects in other countries.

But Ball and Kiernan cautioned that the company would have to assess the current infrastructure such as rail and port access before buying anything.

“You could potentially pounce now and get a good geological resource but you may have to warehouse it for a while,” Ball said.

The pair promoted the company’s solid bottom line as they arranged to take investors, business analysts and media on a site tour of the Nullagine venture next month.

BC Iron had a debt of $139 million at March 31 this year after putting more stake in the Nullagine joint venture with FMG.

Ball said the board has to decide between paying down its debt speedily or paying a bigger dividend than anticipated.

“My personal view is there’s probably a good balance there where we can pay a bit more than we have to, in light of iron ore price volatility, yet still maintain the dividend that is within market expectation.”