PERTH (miningweekly.com) – The share price of junior Flinders Mines stumbled on Thursday as the company announced a joint venture (JV) agreement with BBI Group to jointly develop the Pilbara iron-ore project.
Flinders told shareholders that, subject to approval, the two companies would form an incorporated JV to hold and develop the Pilbara project, with BBI agreeing to fund feasibility studies in return for an initial 10% voting interest.
If a final investment decision is made, BBI and any prospective funding partners would then fund the development and construction of the Pilbara project in return for a 50% shareholding in the project.
At this point, Flinders could elect to continue as a 40% interest holder in the project, free-carried to production, or could convert its interest in the project to an ongoing 2.5% gross revenue stream over the life of the mine.
Flinders deputy chairperson Cheryl Edwardes said on Thursday that the agreement was a significant milestone in the development of the Pilbara iron-ore project.
“We finally have a clear pathway for the integrated development of what we expect will become a significant mine, rail and port system in the Pilbara. We will now embark on a further round of engagement with our shareholders, ahead of a formal vote at the planned extraordinary general meeting, to ensure they have a good understanding of this transaction and how it can deliver value to all shareholders.”
While the Pilbara development is being progressed, BBI will develop its own Balla Balla integrated port and rail infrastructure project.
The Pilbara JV will become a foundation customer for the infrastructure project under a long-term infrastructure services agreement, providing an infrastructure solution for the Pilbara project.
As part of its foundation customer status, a rebate for third party use of the infrastructure and a post Pilbara mile life fee have been negotiated, enabling Flinders to share in the long-term benefits of the infrastructure project.
Flinders shares traded at a low of 7c each on Thursday, down from a high of 7.4c each.