BCI Minerals has agreed to sell its Iron Valley iron ore assets in Western Australia to Polaris Metals, a fully-owned subsidiary of Mineral Resources (MinRes), in a deal worth up to A$72.6m ($48m).

The deal is being executed by BCI Minerals’ 100% subsidiary Iron Valley (IVPL).

BCI Minerals’ Iron Valley tenements, which are located in the Central Pilbara, are operated by Mineral Resources under a royalty-type agreement.

Iron Valley, a direct shipping ore operation producing both lump and fines, began exports in late 2014. The ore is transported to Port Hedland by road trains and exported through Utah Point.

Under the terms of the deal, Iron Valley will receive A$26m upon completion of the transaction. An additional A$12.5m will be contingent upon the start of mining at the Iron Valley North Pit by Polaris Metals.

The iron ore sale and purchase agreement (IOSPA) which is in place with MinRes will be scrapped upon completion of the transaction. BCI Minerals will get a final deferred payment of A$34.1m in July 2025 to settle all outstanding amounts under the agreement.

Polaris Metals will take over responsibility for state and third-party royalties and rehabilitation obligations related to the Iron Valley mine effective from 1 May 2024.

The transaction is expected to complete in early July 2024, subject to receiving Ministerial consent for the transfer of the Iron Valley tenements to Polaris Metals.

BCI Minerals stated that the divestment aligns with its strategic objective to develop an industrial minerals business focused initially on salt and sulphate of potash (SOP). The sale creates value for shareholders, simplifies operations, and strengthens its focus on the Mardie project, said the company.

BCI Minerals managing director David Boshoff said: “BCI appreciates the successful partnership it has had with MinRes and welcomes the opportunity to sell the Iron Valley assets.

“The proposed sale is a strategic decision that enables BCI to realise A$60.1m certain value for these assets, plus a further contingent A$12.5m, and continue to focus on safely delivering the Mardie Project on schedule and on budget, providing value to our shareholders and multi-generational benefits to the community.”

In September 2023, BCI Minerals secured credit approvals for a minimum A$150m project finance facility for the Mardie salt project with a tenor of seven years. The salt and potash project is situated on the Pilbara coast.