PERTH (miningweekly.com) – Junior Flinders Mines has secured a rail solution in Western Australia, striking a deal to acquire the Balla Balla infrastructure project in the Pilbara.

After terminating a farm-in agreement in September of last year, the ASX-listed company has entered into binding agreements with BBIG Group to acquire the shares in Forge Resources Swan.

BBIG, through its subsidiary BBIH, was manager of the integrated Pilbara iron-ore project (PIOP) and had assessed the development of the integrated project. With the termination of the farm-in agreement, Flinders reverted to sole owner of the PIOP giving the company the option to pursue a flexible and staged development of the mine.

The company said in September last year that it was considering a lower-volume near-term Stage 1 trucking operation to take advantage of current iron ore prices, is the optimum strategy to commence operations on site and provide a near term cashflow. Flinders would continue to investigate the development of Stage 2 of the PIOP, a higher volume operation involving rail, road and/or port facilities, the company said at the time.

Under the terms of the agreement announced on Tuesday, Flinders would acquire Forge Swan Resources, which owns assets related to the infrastructure project.

BBIG’s subsidiaries which are parties to the Railway Agreement Act (known as the rail entity) will be retained by BBIG as part of a corporate restructure prior to the completion of the Stage One transaction, with the effect that Flinders will not acquire the State Rail Agreement as part of Stage One.

In Stage Two of the agreement, the rail entity would be transferred to Flinders.

Flinders will acquire all the shares in Forge Swan Resources for A$3.3-million, and if the proposed transaction proceeded to Stage Two, would pay a further A$1 purchase price for the rail entity.

Flinders chairperson Cheryl Edwardes said the proposed transaction would remove the corporate difficulties both Flinders and BBIG have faced in the past, with the ownership of the proposed mine and proposed infrastructure being separated.

“Combining ownership makes complete sense, and I am glad we have been able to do so in a relatively straight forward transaction. Importantly, the proposed transaction provides Flinders shareholders with access to all of the work undertaken by BBIG on agreements, licenses, permits and intellectual property to date, which will all be for the benefit of Flinders going forward, with no ongoing royalties or other corporate structure hinderances to Flinders taking this very significant proposed iron ore project forward to development.

“Flinders looks forward to continuing to work closely with government agencies, native title partners, local small businesses and the Pilbara community to develop the project.”

The transaction is subject to a number of conditions, including Foreign Investment Review Board approval, and the completion of an internal restructure by BBIG to give effect to the staged acquisition of the infrastructure project.

Stage Two of the transaction is subject to the guarantors of the rail entity being fully released from their obligations.

Flinders shareholders are not expected to vote on the transaction.