* Fortescue in talks to sell part of iron ore JV to partner
* BC Iron says deal to cost about $200 million
(Adds analyst quote, details, share movement)
By James Regan
SYDNEY, Dec 10 BC Iron, the smallest
among a tight circle of iron ore miners in Australia's Pilbara
region, is in talks with Fortescue Metals Group to
acquire majority control over its Nullagine joint venture.
The deal, to cost A$190 million ($199.30 million), aims to
boost BCI's stake to 75 percent from 50 percent now and come
into effect Jan. 1, 2013, BC Iron said.
Separately, Fortescue said it did not consider the sale
material to its operations.
Fortescue stock climbed more than 6 percent on word of the
potential sale, outpacing gains in the broader market.
BC Iron was placed on a voluntary trading halt ahead of the
Fortescue is among the world's largest iron ore miners,
while Nullagine remains BCI's key asset. The joint venture was
formed in 2009 to enable BCI to ship ore on a Fortescue-owned
rail line leading to the Indian Ocean.
As of the end of June, the mine was estimated to hold 42.4
million tonnes of ore, grading 57 percent iron content.
Output from the joint venture is slated to rise to around 6
million tonnes annually in fiscal 2013 million tonnes, versus
3.5 million tonnes in fiscal 2012.
"At the time the joint venture was formed, people looked at
the deal as very favourable to FMG and questioned why BCI was
essentially giving away half of the project, but at the end of
the day, BCI is a 50 percent stakeholder in a 5 million tonne
per annum operation," said Chris Drew, a mining analyst for RBC
"Not a lot of other juniors have actually gone into
production," Drew said.
Fortescue has already said it was looking to sell some
non-core assets, with BCI the likely buyer of Nullagine. In
September, Fortescue restructured $5 billion in debt from a
total of $12.7 billion .
Fortescue also eliminated about 1,000 jobs and reduced
expansion plans to 115 million tonnes a year from 155 million
tonnes previously to conserve cash.
Later this month, the company is widely expected to
reactivate development work on its Kings deposit, which was
suspended in September.
BCI said it has entered into a $130 million debt facility
with Commonwealth Bank of Australia and Australia and
New Zealand Banking Group.
It also plans to raise A$54-A$58 million in an equity
raising scheduled for later on Monday, according to the company.
The raising will have an indicative bookbuild price range of
A$2.84-A$3.10 per share, BC Iron said, adding it was being
underwritten by Macquarie Bank.
Existing supply offtake arrangements with Hong Kong-based
Henghou Industries will remain intact, according to BC Iron.
($1 = 0.9533 Australian dollars)
(Editing by Ed Davies)