BCI says Gina Rinehart and Andrew Forrest are eyeing its iron ore projects
Junior miner BCI Minerals has confirmed that its iron ore assets have attracted the interest of mining magnates Gina Rinehart and Andrew “Twiggy” Forrest.
The company’s (ASX:BCI) share price spiked 28 per cent to an intra-day high of 16c on Tuesday, prompting a please explain from the ASX.
BCI said it was aware of an article published by the AFR’s Street Talk that included speculation about the sale of its iron ore assets.
The article listed bidders like Ms Rinehart’s privately owned Hancock Prospecting, Mr Forrest’s Fortescue Metals Group (ASX:FMG), Mineral Resources (ASX:MIN) and BBI Group.
BCI said the article also states the “portfolio is expected to be worth $100 million”.
“BCI is currently in discussions with multiple parties, including the parties referenced in the article,” company secretary Susan Hunt said in her response to the ASX.
“Terms of any transaction, including the value of assets making up the portfolio, have not been settled with any party and discussions are continuing. The $100 million value
referenced in the article is speculative only.”
BCI diversified into salt, potash and gold following the steep drop in iron ore price. It decided to sell off its Pilbara iron ore projects after it sunk to a $16.9 million loss in FY18.
It’s M&A time
There has been a mass exodus by junior players from the iron ore sector.
This has seen the bigger guys swoop in to pick up bargains to expand their own operations.
Mineral Resources previously tried to snap up junior iron ore producer Atlas Iron (ASX:AGO) before it lost out to Hancock Prospecting’s higher all-cash bid.
Centrex Metals (ASX:CXM) recently offloaded its Wilgerup and Kimba Gap projects to South Australian iron ore miner and steelmaker SIMEC Mining – formerly Arrium Mining.
Mount Gibson Iron (ASX:MGX) still has its iron ore project and actually increased its profit 73.5 per cent to $99.1 million in FY18 despite getting a much lower price for its product.
Ironing out problems
The problem for many players is their iron ore is much lower grade than what the big guys can produce.
Lower grade iron ore suffered discounts of as much as 40 per cent in FY18 as Chinese steelmakers increasingly favoured higher quality feedstocks to boost mill productivity and meet more stringent pollution control measures.
Centaurus Metals (ASX:CXM) also still has its iron ore projects, but has expanded its portfolio to include nickel, cobalt, copper and gold.
The company said earlier this year that it prepared and delivered a new product sample from its Jambreiro project to potential steel mill customers in Brazil for testing.
The delivered product returned a high-grade 64.6 per cent iron with very low impurities.
A new player
There is a new player on the scene, however, and it wants to produce up to a 65 per cent product – which attracts big dollars and is something not even majors BHP (ASX:BHP) and Rio Tinto (AS:RIO) are producing.
Emergent Resources is re-listing as Fenix Resources and its goal is to become a niche supplier of high-grade products to the steel industry.
The company, which has launched a $4.5 million capital raising at 4c per share to pave the way for re-listing on the ASX, is acquiring the Iron Ridge project through the acquisition of Prometheus Mining.