BC Iron (BCI) is selling its 75 per cent stake in the mothballed Nullagine joint venture (NJV) to Fortescue.
The project was a 75:25 joint venture between the two companies, with the mine operating for five years before operations were suspended last year due to low iron ore prices.
Since the suspension, BC Iron considered either restarting the operations or selling its interest; indicating that a restart was unlikely.
“Despite the identification of further operating cost savings and an improvement in iron ore prices, the Nullagine mine had remained marginal from BC Iron’s perspective and, based on projected future iron ore prices, it is unlikely that a restart of operations will become viable in the medium term under the current joint venture structure,” the company said, thus proceeding with the sale.
Fortescue will take on BCI’s liabilities and obligations, including the existing site.
“Nullagine has been a successful operation and BC Iron shareholders have extracted significant value from it over a number of years,” BCI chairman Tony Kiernan said.
“BC Iron has now concluded that the sale to Fortescue offers the best potential from a future BC Iron value and risk perspective.”
Earlier this year BCI and Watpac settled a legal dispute over funds owed after Watpac’s mining contract was terminated at Nullagine.
BCI terminated the mining contract with Watpac last year due to the continued decline of iron ore prices, with the company saying it was obligated to make a one off contract termination payment to Watpac.
Watpac later launched legal action claiming it was owed $12.5 million, with the BCI eventually providing a confidential sum to settle the case.