PERTH (miningweekly.com) – Junior iron-ore miner BC Iron and fellow-listed Cleveland Mining have signed two memoranda of understanding (MoUs) to acquire up to 80% shareholding over three separate iron-ore projects in Brazil.

The two ASX-listed companies formed a strategic alliance in August last year to acquire iron-ore projects in Brazil.

BC said on Friday that the MoUs proposed a staged earn-in process linked to the exploration and development assessment of each stage of the projects and would be conditional on the completion of a long-term option to purchase agreement.

Under the first stage of the MoUs, the alliance would spend some $4-million on exploration, with BC noting that the expenditure for each following stage would be dependent on the success of the preceding work to delineate economic mineralisation.

Until the alliance earned an 80% equity, BC and Cleveland would equally co-fund all project expenditure. After this, and once construction and operations started, the alliance and the project vendor would contribute funding in line with their retained equity.

“The Cleveland alliance and these MoUs are a natural part of BC’s three-priority business development strategy,” said MD Mike Young on Friday.

“The deal structure is consistent with our approach to potential growth opportunities in Brazil; that is, the upfront expenditure is relatively small but increases with success and de-risking, and we maintain a tight, commercial relationship with the vendors, who have the in-country knowledge to assist with approvals and community liaison.”

Two of the projects that fall under the MoUs are found in the states of Salvador de Bahia and Minas Gerais, and cover 194 km² and 1 070 km² respectively. The projects are close to known iron-ore mining regions and rail infrastructure.

Young said the alliance believed the projects represented the best grass-roots projects identified and were worthy of meaningful follow-up work.

“The main game for BC is, as always, maintaining its focus and operational efforts on the Nullagine joint venture and considering growth potential in the Pilbara to maintain positive shareholder return and a strong balance sheet.

“This deal introduces early stage greenfield opportunities into the BC stable, which complements the Pilbara focus appropriately,” he concluded.