20 August 2012

BC Iron Forms Iron Ore Strategic Alliance in Brazil

20 August 2012 - BC Iron Limited announced that it has entered into an Iron Ore Strategic Alliance with Cleveland Mining Company Ltd, an emerging Brazilian iron ore development company. Under the terms of the Alliance, BC Iron is taking a 5% equity stake in Cleveland for approximately $6 million. BC Iron and Cleveland will form a 50:50 joint venture aimed at acquiring and developing new iron ore projects in Brazil.

BC Iron continues to maintain a strong focus on growing its Pilbara operations in line with its three tiered growth strategy. As the third tier of its growth strategy, this development provides BC Iron with the opportunity to enter the Brazilian iron ore space without the long lead time needed to ‘come up to speed’ in a new jurisdiction, and at a relatively low cost. 

BC Iron’s prime focus to date has been on the development and ramp-up of the Nullagine Joint Venture in the Pilbara Region of Western Australia which successfully reached its 5Mtpa production rate in May 2012. Similarly, Cleveland has been focussed on its current project hubs and therefore has not been in a position to date to assess other iron ore project opportunities. With this Alliance, both companies are now able to more quickly advance their growth plans. 

Cleveland and BC Iron will form an incorporated 50:50 joint venture which will seek to acquire and develop iron ore projects in Brazil, utilising their respective expertise and operating histories. The Alliance provides BC Iron with an entry into the Brazilian iron ore space with a company experienced in operating in Brazil and with quality people in-country, with BC Iron also providing further technical and operational support. 

Cleveland has a very capable and proven management team and Board, most of whom were on the Fortescue team which discovered and developed the Chichester Project. Furthermore, Cleveland NonExecutive Director, Russell Scrimshaw, worked closely with BC Iron during and after the establishment of the Nullagine Joint Venture (BCI 50%: FMG 50%). With its strong presence and experience in Brazil, the Brazilian Joint Venture is well positioned to efficiently fast-track the potential development of iron ore projects, a number of which are already under consideration. 

The existing projects in Cleveland’s Amapá Hub, including the Ferradura Iron Project, will not at this stage form part of the Alliance.

Managing Director of BC Iron, Mike Young, said, “This new Joint Venture will allow BC Iron to enter a new country and new market with key people, relationships and their intellectual property already in place. The nature and size of the transaction is entirely consistent with our stated Business Development strategy. 

The Managing Director of Cleveland, David Mendelawitz said that the partnership between Cleveland and BC Iron has great potential. “BC Iron has successfully built a 5 million tonnes per annum Joint Venture operation, with Fortescue, in the Pilbara in rapid time. They have the leadership, experience and financial strength that make for an excellent JV partner,” said Mendelawitz. 

Source: BC Iron