Flinders Mines has formed a farm-in incorporated joint venture with BBI Group for its flagship Pilbara iron ore project (PIOP).
The companies will establish the joint venture to develop the PIOP through feasibility studies for the operations development in return for an initial 10 per cent voting interest in PIOP Mine Co.
PIOP is south of Rio Tinto’s Caliwingina iron ore resource, and west of Fortescue Metals Group’s Solomon iron ore hub.
The prospective funding partners will fund development and construction of PIOP in return for a further 50 per cent shareholding.
In this case, Flinders will elect to continue as either a 40 per cent shareholder or convert its 40 per cent shareholding in PIOP to an ongoing 2.5 per cent gross revenue stream over the life of the mine production.
Meanwhile, as the PIOP development is being progressed, BBIG will develop the Balla Balla infrastructure project (BBI Project).
PIOP Mine Co will become a foundation customer for the BBI Project under a long-term Infrastructure Services Agreement, thus providing an infrastructure solution for the PIOP development.
Assuming Flinders elects to proceed with the Mining Option, a rebate for third party use of the infrastructure and a post-PIOP mine life fee have been negotiated.
This will enable Flinders to further share in the longer-term benefits of the infrastructure solution.
Flinders deputy chair, and chair of the PIOP Infrastructure Committee Cheryl Edwardes said, “This is a significant milestone in the development of the Pilbara Iron Ore Project.”
“We finally have a clear pathway for the integrated development of what we expect will become a significant mine, rail and port system in the Pilbara,” Edwardes said.
Embarking on further engagement with their shareholders, Edwardes plans to ensure there is a good understanding of this transaction and how it can deliver value to all shareholders.
The proposed transaction will be subject to shareholder’s approval, expected to be discussed at the Extraordinary General Meeting held in January 2020.