PERTH (miningweekly.com) – Iron-ore miner Fortescue Metals has taken joint venture (JV) partner BC Iron’s 75% stake in the Nullagine project, in Western Australia, for A$1.

Operations at the Nullagine JV were suspended at the end of last year on the back of falling iron-ore prices, with the project sending its last shipment in March. Since the operations were suspended, BC Iron has been considering its strategic options in relation to Nullagine, including the potential restart and the sale of its JV interest.

The miner said on Monday that despite the identification of further operating cost savings, and improved iron-ore prices, the Nullagine mine remained marginal from BC Iron’s perspective, and based on projected future iron-ore prices, it was unlikely that a restart of operations would become viable in the medium term, under the current JV structure.

Under the deal struck with Fortescue, the iron-ore major will assume BC Iron’s liabilities and obligations for the JV project, including the existing rehabilitation liability. BC Iron will retain its $1.5-million debt obligation to Henghou Industries, and an obligation to pay A$5.2-million in deferred state government royalties.

Furthermore, Fortescue will pay BC Iron a royalty from the sale of iron-ore mined at the site in the future, which will be partially withheld, up to A$7.5-million, to offset obligations, including rehabilitation.

Fortescue CEO Nev Power said on Monday that the decision to purchase the remaining 75% stake in the Nullagine JV reflected the outcome of constructive discussions between the parties since the suspension of operations in 2015.

“We have enjoyed a strong working relationship with BC Iron through the life of the Nullagine JV, and believe this is a positive outcome for both companies. We will review operations over the coming months to determine the best path forward, taking into account all relevant factors, including market demand and other potential opportunities to extract value from the assets.”

BC Iron MD Alwyn Vorster said that despite the sale of the asset, the company would continue to have exposure to the future Nullagine operations through the ongoing royalty payment.

“Importantly, the sale will also reduce exposure for BC Iron by eliminating its rehabilitation liability, as well as monthly costs of between A$150 000 and A$200 000 associated with holding the JV interest. Management will also be in a position to direct additional time and resources towards maximising the value of our Buckland project, and potentially securing attractive new project opportunities.”

BC Iron is studying the potential for an eight-million-tonne-a-year operation at Buckland, in Western Australia. The company sees the mine, which will operate for 15 years, as a strategic project, considering it had its own mine-to-port logistics solution.