FMG sells 25% interest in Nullagine iron ore project to BC Iron

Fortescue Metals Group (FMG) has agreed to sell half of its 50% interest in the Nullagine iron ore project to its joint venture partner BC Iron for a consideration of A$190 million ($199 million).

December 10, 2012

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This will give BC Iron a 75% stake in the project while FMG retains the remainder, the latter said on Monday December 10.

The two partners have also agreed to increase the available capacity to the Nullagine on FMG’s rail and port infrastructure to 6 million tpy for the life of the mine from the current 5 million tpy.

Nullagine is currently producing at a run rate of 5 million tpy.

FMG ceo Nev Power said the deal enabled the company to partially monetise a non-core asset.

“The funds provide additional liquidity as we consider a restart of the Kings mine at Solomon,” he added.

The transaction is expected to close on or before December 24 and effective January 1, the statement noted.

BC Iron will fund the total consideration through a combination of existing cash, a $130 million debt facility and approximately A$54-58 million in equity-raising.