Russian steelmaker Magnitogorsk to buy Australia's Flinders Mines for $538 mn

Russian steelmaker Magnitogorsk Iron and Steel Works (MMK) on Friday offered to buy Australian iron miner Flinders Mines, for A$554 million ($538 million) in cash, in order to secure supplies of the mineral that is essential in steel making.

The board of Flinders Mines has agreed to MMK's offer of 30 Australian cents a share, an 80 per cent premium to the company's trading price on 22 November, and nearly 93 per cent higher than the 30-day average.

The Pilbara iron ore miner said the offer eliminates its development risk and provides its shareholders with an opportunity to immediately realise value for their shares in a volatile and uncertain market.

Adelaide-based Flinders Mines, formerly known as Flinders Diamonds Limited, operates in the resource rich region of Pilbara, Western Australia.

It holds 100 per cent interest in two iron ore deposit tenements in the Hamersley Ranges in the Pilbara.

Its Pilbara iron ore project has an expected development cost of $640 million. The project has a 20-year mine life and is expected to produce up to 15 million tonnes of iron ore per year by the 4th quarter of 2014 at a cash operating cost of A$35 a tonne.