BCI Minerals has secured the first sale of its Pilbara iron ore divestment process by agreeing to offload the Kumina project to Mineral Resources (MinRes) for up to $35 million.
Kumina, one of several iron ore assets BCI plans to divest in the Western Australian region, caught the eye of MinRes for the complementary location it provided to the company’s existing operations.
The sale and purchase agreement involves MinRes paying BCI $27 million at completion of the deal, expected by the end of 2018.
MinRes will pay an additional $4 million to BCI when it achieves first export of iron ore from Kumina and an additional $4 million 12 months after first export.
The Kumina sale will deliver a substantial profit for BCI, according to managing director Alwyn Vorster.
“A positive return on the Kumina investment has been achieved given the tenements were acquired for less than $9 million in late 2017 followed by a modest six-month exploration program which resulted in a maiden JORC mineral resource of 115 million tonnes at 58 per cent Fe,” Vorster said.
BCI plans to sell its entire Pilbara iron ore portfolio, including the MinRes-operated Iron Valley project, to focus on developing its Mardie salt and potash project.
Kumina is in the West Pilbara around 100km south of Karratha. The project has a JORC inferred mineral resource of 78.3 million tonnes at 59.1 per cent Fe cut-off.
MinRes managing director Chris Ellison said the company was not interested in acquiring BCI’s entire iron ore portfolio.
“However, an opportunity arose late in BCI’s divestment process for Mineral Resources to acquire Kumina project on its own. The Kumina project transaction builds on our successful relationship with BCI, our partner in the Iron Valley iron ore project,” Ellison said.
“The location of the Kumina project will enable the company to leverage its existing workforce and logistics supply chain in the Pilbara, with the ore to be exported out of Port Hedland.
“Mineral Resources retains its exclusive right to operate the Iron Valley iron ore project and purchase all iron ore produced.”
BCI continues to discuss the divestment of its other iron ore assets with interested buyers. It will use the funds received from the Kumina sale to advance the Mardie project, Vorster added.
“Proceeds from the Kumina sale will be sufficient to fast track the development of BCI’s 100 per cent owned Mardie salt and potash project during 2019, including finalising a definitive feasibility study (DFS), establishing test evaporation ponds and completing construction of project support infrastructure,” Vorster said.