BCI Minerals Limited (ASX: BCI) has announced a pivotal agreement involving its subsidiary Iron Valley Pty Ltd (IVPL), which has entered into a binding deal to sell its Iron Valley iron ore assets to Polaris Metals Pty Ltd, a wholly-owned subsidiary of Mineral Resources Limited (MinRes). The transaction, valued at AU$ 72.6 million (USD 48.2 million), signifies a strategic move for BCI to optimise its asset portfolio and concentrate efforts on its Mardie Project.
Under the terms of the agreement, IVPL will initially receive AU$ 26.0 million upon completion of the transaction. An additional contingent payment of AU$ 12.5 million is slated for disbursement upon the commencement of mining activities at the Iron Valley North Pit by Polaris. The existing Iron Ore Sale and Purchase Agreement (IOSPA) with MinRes will be terminated upon the completion of this transaction. BCI Minerals is set to receive a final deferred payment of AU$ 34.1 million in July 2025, settling all outstanding amounts under the IOSPA and concluding the transaction.
Polaris Metals Pty Ltd will undertake the responsibility for state and third-party royalties, as well as rehabilitation obligations related to the Iron Valley mine effective immediately upon receiving ministerial consent for the transfer of Iron Valley tenements. The transaction is anticipated to be finalised in early July 2024, subject to regulatory approvals and customary closing conditions.
This strategic divestiture aligns with BCI Minerals' broader corporate strategy to unlock value from its non-core assets while maintaining a steadfast focus on advancing its flagship Mardie Project. The Mardie Project, located in Western Australia, aims to develop a large-scale, long-life salt and potash project that promises significant economic and social benefits to the region.
In a statement regarding the transaction, BCI Minerals emphasised the financial benefits, highlighting the realisation of AU$ 60.1 million in certain value from the Iron Valley assets, coupled with the potential contingent payment. The move underscores BCI's commitment to enhancing shareholder value and delivering sustainable benefits to local communities through strategic project developments.
The transaction has been structured to provide flexibility to both parties, allowing either to terminate the agreement if conditions precedent are not met by early September 2024. Market observers have noted the deal's significance in reshaping the operational focus of both BCI Minerals and Mineral Resources Limited within the competitive landscape of the Australian resources sector.
As BCI Minerals progresses towards completing the transaction with Polaris Metals Pty Ltd, stakeholders and industry analysts will be monitoring developments closely for regulatory approvals and updates on the Mardie Project. The divestment marks a strategic step for BCI Minerals in optimising its asset portfolio and concentrating resources on high-value projects poised for sustainable growth.