Iron Valley is an operating mine located in the Central Pilbara, which is being operated by Mineral Resources Limited (“MIN”) under royalty-type agreement. As at 30 June 2018, Iron Valley’s Mineral Resource was 197.8Mt at 58.1% Fe and its Ore Reserve was 95.4Mt at 58.4% Fe (refer here for more details).
Iron Valley commenced exports in October 2014 and is generating royalty-type earnings for BCI. MIN operates the mine entirely at its cost and purchases Iron Valley product from BC Iron at a price linked to MIN’s realised sale price. BCI retains ownership of the tenements and certain statutory obligations, including payment of royalties. Iron Valley generated EBITDA for BCI of A$5.6M in FY18 and A$18.3M in FY17. Iron Valley is a relatively simple DSO operation which produces both lump and fines, which are hauled to Port Hedland utilising road trains and exported via Utah Point. It has a mine life of approximately 15 years based on current production rates of 6-7Mtpa.
MIN is seeking to implement an enhanced logistics solution for Iron Valley known as the Pilbara Infrastructure Project, which comprises an innovative light rail transport system connecting to automated port infrastructure at Port Hedland. The Pilbara Infrastructure Project would enhance the long term viability of the Iron Valley operation and has the potential to double production rates and BCI’s royalty.