Mineral Resources (MinRes) has agreed with BCI Minerals to purchase the Buckland iron ore project in Western Australia’s Pilbara region for up to $20 million in cash.
This deal is one of a series of agreements made between the two companies to expand MinRes’ footprint in the Pilbara.
The Buckland project encompasses a 134 million tonne ore reserve, haul road licenses, designs, approvals and agreements.
The binding agreement for its sale comprises cash payments of up to $20 million, including $6 million upon completion and a further $14 million once certain milestones are reached.
This sale from BCI to MinRes is unconditional and is scheduled for completion in early April.
MinRes and BCI have also optimised their existing Iron Valley agreement, whereby BCI will participate in the capital investment required to extend Iron Valley’s mine life, through a partial rebate of MinRes’ payments to BCI.
“This latest series of agreements reflects our strong partnership with BCI,” MinRes managing director Chris Ellison said.
“(They) provide further opportunity for MinRes’ mining services business to create value from standard iron ore deposits in the Pilbara.”
MinRes has been operating the Iron Valley mine and contributing 100 per cent of the capital and operating costs since 2014.
BCI has been receiving a quarterly gross royalty, from which it pays third party royalties.
Iron Valley requires significant additional investment during 2020 to upgrade waste stripping and other infrastructure.
BCI has agreed to share in the cost of these activities to improve the mine life, rebating a 40 per cent portion of its royalties to MinRes until the total rebated amount reaches $25 million.
This is subject to BCI receiving a minimum net royalty of $1.5 million per quarter and if MinRes suspends Iron Valley operations, it must continue to pay the minimum net royalty to BCI for the next two quarters.