THE BOURSE WHISPERER: Iron Ore Holdings Limited has sold off its Koodaideri South tenement located in the Pilbara region of Western Australia.
The buyer was none other than Rio Tinto 100% owned subsidiary Hamersley Iron.
The price paid by Red Dog’s parents was $32 million cash plus a two per cent Free On Board royalty on ore mined from the tenements.
The transaction came after IOH held a 12-week strategic review of its Central Satellite deposits where the company considered its optimum value creation options, including self-development, joint venture structures or divestment.
IOH said that the Rio Tinto offer for Koodaideri South was selected from a number of proposals, and was accepted on the basis of it providing the best strategic value for IOH in terms of both the cash component and the future exposure to a production royalty.
Koodaideri South is one of five tenement groups comprising the company’s Central Satellite deposits and has three currently identified resources named Kurrajura, Fingers and Bight, which jointly contain 106 million tonnes of JORC Resource at an average 58.6% iron.
The company was forthcoming in its praise of Rio saying it was happy to be involved in such a transaction with a company that was an industry leader that continues to recognise and realise the growth potential of their Pilbara operations.
Iron Ore Holdings managing director Alwyn Vorster said the transaction had disproven the theories of some people outside the company who considered the Central Satellite deposits to be infrastructure stranded and too small to contribute much value.
“The cash plus royalty value achieved for the Koodaideri tenement provides a benchmark for the Iron Valley and Bungaroo South deposits, which are both more valuable in terms of resource size and strategic location,” he said in the company’s announcement to the Australian Securities Exchange.
IOH is carrying on discussions with other interested parties in regard to the commercialisation of the remaining Central Satellite tenements.
The company said that funds generated from the process will be applied to further exploration and project studies, potential new business opportunities and to potential capital management initiatives.