03/03/2020 - 15:25

Flinders receives shareholder approval for PIOP

03/03/2020 - 15:25

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Flinders Mines has gained shareholder approval to progress its Pilbara iron ore project, following months of questioning from minority shareholders over the role major shareholder Todd Corporation would play in developing the project.

Flinders receives shareholder approval for PIOP
Neil Warburton called the agreement with BBI Group commercial, logical and achievable. Photo: Gabriel Oliveira

Flinders Mines has gained shareholder approval to progress its Pilbara iron ore project, following months of questioning from minority shareholders over the role major shareholder Todd Corporation would play in developing the project.

That deal, which will involve Flinders entering into a joint venture with BBI Group, was carried at a Flinder's EGM held earlier today, with 67 per cent of shareholders voting to approve the deal.

In comments accompanying the ASX announcement, Flinders non-executive chair Neil Warburton emphasised the significance of the deal.

“This asset has sat stranded for too long and finally we have a commercial, logical and achievable development proposition to unlock the value of the PIOP for all shareholders,” Mr Warburton said.

“We are pleased that the majority of eligible voting shareholders have seen the significant opportunity that the independent directors also saw in this transaction.

“The board will move quickly to execute the necessary documentation to formalise the joint venture so that BBIG can begin the required work on the PIOP feasibility study.

“This is the start of an exciting development opportunity for the PIOP, the flagship asset for Flinders.”

As part of the transaction, Flinders and BBIG will form a joint venture to develop the project, with BBIG to perform a feasibility study in return for a 10 per cent voting interest in the venture.

Pending a final investment proposal, Flinders will then have the option to either retain a 40 per cent interest in the venture, or, subject to shareholder approval, select a 2.5 per cent gross revenue royalty option.

While Flinders chief executive David McAdam and non-executive directors Cheryl Edwardes and James Gurry repeatedly made the case that the deal was the only feasible path for the project in the months running up to a final vote, minority shareholders had repeatedly expressed misgivings with Flinders' relationship with BBIG.

This was due to majority shareholder Todd Corporation’s relationship with the two companies, which holds a 56 per cent stake in Flinders and a 90 per cent stake in BBIG.

Although PWC and Grant Samuel provided favourable assessments of the deal in their independent reviews, minority shareholders were concerned over Todd Corporation’s interests in the projects, including BBIG’s development of a new port and rail line for the project.

Todd Corporation was exempted from voting on today’s deal due to that conflict of interest.

Speaking at an information session held late last month ahead of a final vote, Mrs Edwardes said that though the deal might have been similar to others previously considered by Flinders, the agreement approved today was the best way to deliver value back to shareholders.

“We recommend this deal to the shareholders because it’s going to add value to PIOP by being able to go mining,” she said.

“If there’s any way of getting value back in for shareholders, it’s actually to get the mine up and running.”

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