BC Iron to expand with acquisition of IOH Holdings

THE BOURSE WHISPERER: BC Iron (ASX: BCI) and Iron Ore Holdings (ASX: IOH) have entered into a Bid Implementation Agreement.

Under the terms of the offer BC Iron will acquire all of the issued shares of IOH via an off-market takeover offer, which will result in IOH shareholders receiving 0.44 new BC Iron shares and 10 cents in cash for each IOH share held.

The offer values IOH at $1.59 per share and represents a generous premium of 79 per cent to the company’s 60 day VWAP up to close of trade on 8 August 2014 of 89 cents.

To make life easy for all involved BC Iron’s offer has been given a unanimous nod of approval by the directors of IOH, all of whom have indicated to accept, or procure the acceptance of, the offer in respect of any IOH shares that they control, in the absence of a superior proposal.

IOH’s major shareholder, Australian Capital Equity has also given its thumbs up for the offer.

BC Iron said the transaction will strengthen its Pilbara presence, transfer IOH’s projects into a larger entity, and create a leading mid-cap iron ore company with the following attributes:

Combined DSO / CID Ore Reserves of 294 million tonnes at 58 per cent iron, DSO / CID Mineral Resources of 626.5 million tonnes at 56.8 per cent iron, and 1.1 billion tonnes at 30.4 per cent iron of magnetite Mineral Resources;

A portfolio of production and development assets in a world class iron ore jurisdiction, including:

Nullagine: A 75 per cent joint venture interest with Fortescue Metals Group (ASX: FMG);

Iron Valley: A project with a 20 year mine life that is expected to start generating meaningful, low-risk cash flows from production occurring in the current quarter, via an existing mine gate sale agreement with Mineral Resources (ASX: MIN); and

Buckland: A long-life, low capital intensity mine to port development project with significant Ore Reserves, a completed Feasibility Study, its own proposed infrastructure (haul road to a port at Cape Preston East, with the capacity to also carry third party product) and all primary tenure and licences secured.

The combined entity will boast a strong balance sheet, with unaudited pro-forma cash as at 30 June 2014 of $190 million and debt of $54 million.

“We are very excited about this transaction,” BC Iron managing director Morgan Ball said in the company’s announcement to the Australian Securities Exchange.

“BC Iron has looked closely at a large number of potential growth opportunities over an extended period, and we believe that, combined with our existing business, IOH’s portfolio of long-life iron ore assets in the world’s best iron ore address presents us with an excellent opportunity to create meaningful and sustained long-term value for our shareholders.

We are also pleased to welcome IOH’s major shareholders on to our register, and we look forward to working with them to deepen our ties in our key markets.”

Ball’s comments were supported by IOH managing director Alwyn Vorster, who said the combination of the two companies will generate strong technical and commercial synergies, with longer term value benefits for all IOH shareholders from the IOH assets.

“The transaction structure also supports greater funding and development optionality for the Buckland project, with its road and port components potentially opening up the West Pilbara to other parties,” he said.

Email: info@bciron.com.au     info@ironoreholdings.com

Website: www.bciron.com.au    www.ironoreholdings.com