BC Iron and Cleveland Mining Alliance sign Brazil MoU

THE BOURSE WHISPERER: BC Iron (ASX: BCI) and Cleveland Mining Company (ASX: CDG) have signed two Memoranda of Understanding (MoU) to earn the rights to acquire up to 80 per cent of three separate iron ore exploration projects in the Brazilian states of Salvador da Bahia and Minas Girais.

The proposed acquisitions constitute the first iron ore projects in Brazil for the Strategic Alliance that was struck between BC Iron and Cleveland in August 2012.

 

Location plan of proposed MoU projects. Source: Company announcement

 

The MoU propose a staged earn-in process linked to appropriate levels of exploration and development assessment for each successive stage and are conditional upon the satisfactory completion of long form Option to Purchase Agreements.

Since being formed, the BC Iron/Cleveland alliance has looked at a number of Brazilian iron ore opportunities, ranging from greenfields exploration prospects to producing mines.

“The Cleveland Alliance and these MoU are a natural part of BC Iron’s ‘Three Priorities’ Business Development strategy,” BC Iron managing director Mike Young said in the company’s announcement to the Australian Securities Exchange and possibly his last official duty in the role.

“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.

“The main game for BC Iron is, as always, maintaining its focus and operational efforts on the Nullagine JV 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 Iron stable which compliments the Pilbara focus appropriately.”

In its release to the ASX BC Iron explained the projects subject to the MoU were selected for further work based on outcropping iron mineralisation, geology, geophysical signatures, community attitude to mining development, and options for port and rail logistics.

The alliance has been targeting itabirite iron mineralisation that is expected to be in the range of 30 – 45 per cent iron, which could then be upgraded to a higher grade product.

This is typical of Brazilian iron ores, which are highly sought after by the international steel industry.