19/12/2014 - 13:16

BC Iron flags Iron Valley investments

19/12/2014 - 13:16

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BC Iron has announced it is working with Mineral Resources on potential new investments at the Iron Valley mining operation in the Pilbara, to improve its commercial viability.

The Iron Valley Project is located in the Central Pilbara.

BC Iron has announced it is working with Mineral Resources on potential new investments at the Iron Valley mining operation in the Pilbara, to improve its commercial viability.

Mineral Resources operates Iron Valley on behalf of BC Iron, which acquired the mine through its takeover this year of Iron Ore Holdings.

BC said current market conditions had led the two companies to explore a range of initiatives at the mine site and in the supply chain to reduce production costs and improve saleability of the project’s ore.

Mineral Resources will be responsible for funding the initiatives, and has flagged a final investment decision in April of next year.

The project will continue as a direct shipping ore operation in the interim.

Under the agreement, BC Iron won’t incur losses from the operation of the mine, and the company predicts EBITDA from the operation of between $2 million and $24 million.

Managing director Morgan Ball said the variation to the agreement would benefit both companies.

“(It) ensures BC Iron continues to generate an earnings stream from Iron Valley in the current environment and facilitates Mineral Resources investing further capital to develop Iron Valley into a robust, long-term operation,” he said.

The mine started production in the September quarter, while road haulage and shipping got under way in the current quarter.

Production is expected to continue at a rate of between 3 million tonnes and 5mt per annum.

Iron Valley has ore reserves of more than 130mt, with a concentration of around 58.3 per cent iron, putting it in the middle of the pack in terms of saleability among WA’s iron producers.

BC Iron was down 2 per cent to 49.5 cents at the time of writing, while Mineral Resources was up 9 per cent to $7.36.

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