Fortescue Metals Group Ltd, the world's fourth-largest iron ore miner, today said that it would sell a 25-per cent stake in the Nullagine iron-ore mine in Western Australia to joint-venture partner BC Iron Ltd, for A$190 million ($199 million).
The deal will increase BC Iron's stake to 75 per cent from 50 per cent and its share of the production would increase by 80 per cent to 4.5 Mtpa.
BC Iron said it would fund the purchase through a combination of debt, equity and existing cash, and had secured a $130-million five-year debt facility with Commonwealth Bank of Australia and Australia and New Zealand Banking Group.
The Perth-based company has agreed to make extra payments to Fortescue if the average monthly iron ore price rises above $120 a metric ton between April 2013 and September 2014.
The Nullagine Iron Ore Project, holds probable reserve of 42.4 million tonnes with a grading of 57 per cent iron content. The JV, inked in 2009 uses Fortescue's infrastructure at Christmas Creek, 50km south of the Mine, to rail its ore to Port Hedland from where it is then shipped to customers overseas.
Fortescue, controlled by Australian billionaire Andrew Forrest, has been seeking to sell some of its non-core assets in order to reduce debt.