Fortescue Metals Group Ltd has reached an agreement with BC Iron Ltd in relation to the Nullagine Iron Ore Joint Venture including a 25%partial divestment of Fortescue's interest for total net proceeds of AUD 190 million.
Fortescue and BC Iron currently each own a 50%interest in the NJV in the Pilbara region of Western Australia.Under the agreement,Fortescue will sell 25%of the NJV to BC Iron,leaving it with a remaining 25%interest.
Fortescue and BC Iron have also agreed to increase the available capacity to the NJV on Fortescue's rail and port infrastructure from the existing 5 million tonnes per annum,to 6 million tonne per annum for the life of the JV.The total consideration paid by BC Iron to Fortescue will include a one off prepayment of rail haulage and port charges for 3.5 million wet tonnes of its share of production from the NJV.
BC Iron has also agreed to a price participation arrangement from 1st April 2013 to 30th September 2014,which will require BC Iron to make payments to Fortescue if the average Platts 62%Fe iron ore index price is more than USD 120 per dry metric tonne in a particular month.
Mr Nev Power CEO of Fortescue said that the transaction enabled Fortescue to partially monetize a non core asset and continue its commitment as a provider of infrastructure services to third parties.
Mr Power said that"This is a fantastic outcome for both parties.It reflects the strong relationship we have established with BC Iron over the years and it forms part of our strategy to divest non core assets.The funds provide additional liquidity as we consider a restart of the Kings mine at Solomon."
