BCI holds a number of potential iron ore royalties over third party projects located in the Pilbara.
In October 2016, BCI agreed to sell its 75% interest in the Nullagine Project to Fortescue Metals Group Limited (“Fortescue”). BCI retains a royalty on 75% on all future iron ore mined from Nullagine of:
1.0% to 2.0% of FOB revenue for ≥55% Fe iron ore; and
0.50 to A$1.50 per tonne for <55% Fe iron ore, adjusted for 15% yield loss.
Fortescue will initially pay BCI 33% of the agreed royalty in cash, until the total amount waived by BCI equals A$7.5M. Thereafter, Fortescue will pay BCI 100% of the agreed royalty.
A 50% reduction in the royalty rate will apply to all iron ore mined above 15 million tonnes and a 75% reduction will apply to all iron ore mined above 25 million tonnes.
At the time of sale to Fortescue, the Nullagine Project had Ore Reserves of 21.6Mt. The mine could be restarted rapidly if Fortescue elects to do so.
Koodaideri South Royalty
Koodaideri South forms part of the larger Rio Tinto proposed Koodaideri mine in the Central Pilbara. BC Iron is entitled to a royalty of 2% of FOB revenue on any ore mined from the Koodaideri South project area.
At the time of sale to Rio Tinto, Koodaideri South had Mineral Resources of 106Mt at 58.6% Fe.
Rio Tinto is currently undertaking a feasibility study on the larger Koodaideri mine, with the potential for construction to commence in 2019 and first production during 2021.
The Extension Project is owned by Australian Aboriginal Mining Corporation Limited (“AAMC”). BCI is entitled to a $1.75M cash payment 90 days after production commences and a royalty of 1.25% to 2.50% of FOB revenue on all iron ore produced.
At the time of sale to AAMC, Extension had Mineral Resources of 15.6Mt at 54.0% Fe.
AAMC is currently progressing development and funding solutions for the Extension Project.