PERTH (miningweekly.com) – Junior iron-ore miner BC Iron has launched a combination share and cash takeover offer for fellow-listed Iron Ore Holdings (IOH).

BC Iron is offering IOH shareholders 0.44 of its own shares, and 10c in cash for every IOH share, valuing the takeover target’s shares at A$1.59 each. The offer represents a 79% premium to the junior’s 60-day volume-weighted average price of 89c a share.

The IOH board on Monday unanimously recommended that shareholders accept the offer, noting that its major shareholder, Australian Capital Equity, had already indicated that it would accept the takeover offer.

Assuming that BC Iron was able to gain full control of IOH, the company’s current shareholders would own a 36.6% stake in the combined group, with Australian Capital Equity, which currently holds 52.7% of the company’s interest, holding a 19% share in the combined stake.

BC Iron said the acquisition would strengthen the company’s Pilbara presence, transferring IOH’s projects into a larger entity, and creating a leading mid-cap iron-ore company with a combined direct shipping ore (DSO) reserve of 294-million tonnes, grading 58 g/t iron, a DSO mineral resource of 626.5-million tonnes, at 56.8% iron, and a 1.1-billion-tonne magnetite mineral resource, grading 30.4% iron.

“We are very excited about this transaction. BC Iron has looked closely at a large number of potential growth opportunities over an extended period, and we believe that, combined with our existing business, IOH’s portfolio of long-life iron-ore assets in the world’s best iron-ore address presents us with an excellent opportunity to create meaningful and sustained long-term value for our shareholders,” said BC Iron MD Morgan Ball.

BC Iron was currently producing from its Nullagine joint venture, in the Pilbara, which was 25% held by iron-ore major Fortescue Metals.

IOH MD Alwyn Vorster said the combination of the two companies would generate strong technical and commercial synergies, with significant longer-term value benefits for all IOH shareholders.

“The transaction structure also supports greater funding and development optionality for the Buckland project, with its road and port components potentially opening up the West Pilbara to other parties.”

IOH holds the Iron Valley project, which has a potential mine life of about 20 years, as well as the Buckland project, which includes a possible eight-million-tonne-a-year mine at Bungaroo South, and a new 196 km sealed haul road.

The company also holds two exploration tenements in west Pilbara, royalties on a number of tenements held by third parties in the central Pilbara region, as well as a number of tenements prospective for base metals.

The takeover offer was subject to a minimum 90% acceptance condition, the consent from the Pilbara Ports Authority for the change in control of IOH, as well as the iron-ore price not closing below A$90/t on any 20 consecutive days on which Platts IODEX 62% iron benchmark assessment is published.