BC Iron has transitioned from a junior explorer to establishing the
Nullagine Joint Venture (NJV) as a 6 million tonnes per annum
(
Mtpa) mid-tier iron ore producer in the Pilbara region of Western
Australia in just over six years. Admitted to the S&P ASX 300
index in March 2013, BC Iron’s operational success has attracted
an enviable list of blue chip institutions to its share register, with
an associated increase in the liquidity of its shares.
Following the retirement of Mike Young, the founding
Managing Director, Morgan Ball was appointed as Managing
Director in May 2013. Mr Ball was previously the company’s
Finance Director, heading up the corporate division at BC Iron
for more than three and a half years and was responsible for
spearheading the recent Fortescue transaction.
In this transaction, completed in December 2012, BC Iron
increased its equity stake in the NJV from 50% to 75%, increased
NJV access to infrastructure from 5Mtpa to 6Mtpa and made a
prepayment in relation to 3.5 million tonnes (Mt) of rail and port
services for A$190 million (plus a price participation arrangement
payable in certain iron ore price conditions). The transaction
was financed and paid to Fortescue Metals Group through a
combination of debt, equity and cash which resulted in BC Iron
raising its share of production from the NJV with Fortescue by 80%
from 2.5Mtpa to 4.5Mtpa.
In relation to the transaction Mr Ball said “This was the best
type of M&A (mergers and acquisitions) transaction in that it was
a win-win for both parties. It was pleasing to execute a
transaction that confirmed to the market that BC Iron will assess
its opportunities in a measured manner with a focus on
shareholder accretion”.
The NJV involves BC Iron managing and operating the
Nullagine mine before transporting the ore from the mine to
Fortescue’s rail infrastructure at Christmas Creek, approximately
58
kilometres to the south. From thereon, The Pilbara
Infrastructure (TPI), a subsidiary of Fortescue, is contracted
by the NJV to rail the ore to Port Hedland from where it is
shipped directly to customers overseas.
“
The joint venture with Fortescue has been in place for four
years now and has gone from strength to strength. The level
of communication and cooperation between the NJV parties is
first class,” said Mr Ball.
The NJV currently hosts ore reserves of 37.2Mt grading
57.1%
Fe within a mineral resource of 117.7Mt grading
53.4%
Fe. The product known as ‘Bonnie Fines’ is a high quality
direct shipping ore with low impurities, very low phosphorous
content and exceptional sintering qualities. These key features
have ensured that the product has rapidly achieved market
acceptance and remains highly valued by customers in China.
BC Iron expects the NJV to export between 5.8 and 6.2Mt for
FY2014 and has adopted this production guidance range rather
than providing an absolute number given the unpredictability
of rainfall in the Pilbara. This will generate strong cash flows for
BC Iron as a result of low life of mine cash operating costs of
between $46 and $50 per tonne, excluding state royalties,
marketing and corporate costs.
Ever since the first positive drill results in May 2007, BC Iron
Success insix
BC Iron moves up to mid-tier status
Morgan Ball
Managing Director
BC Iron Ltd
Ore being transported to Christmas Creek rail load-out facility via haul road
Minesite 2013
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