- Flinders Mines (FMS) has received an offer from farm-in partner BBI to restructure infrastructure ownership at the Pilbara Iron Ore Project (PIOP)
- BBI wants to divest its share in the project and offload its port and rail infrastructure, with Flinders to gain 100 per cent control of both
- BBI has floated the potential deal as a means to streamline financing discussions for the project with mining and infrastructure assets under a single corporate umbrella
- Flinders would pay the nominal sum of $1 plus a five per cent royalty on all goods shipped from the Balla Balla Port facility to settle the deal
- The deal is still embryonic at this point, with both companies needing to complete due diligence and gain approvals from shareholders and regulators
- Flinders Mines is down 2.17 per cent, trading at $1.35
Flinders Mines (FMS) has received an offer from farm-in partner BBI to restructure infrastructure ownership at the Pilbara Iron Ore Project (PIOP).
The deal
The companies signed a farm-in agreement for the project in March 2020. BBI subsidiary BBIH satisfied the conditions of the agreement during the September quarter, and was named manager of the project.
Now, BBI is looking to divest its share in the project and offload its port and rail infrastructure, with Flinders to gain 100 per cent control of both.
BBI has floated the potential deal as a means to streamline financing discussions for the project with mining and infrastructure assets under a single corporate umbrella.
The non-binding indicative offer BBI has put on the table would see Flinders take full control of the PIOP and Forge Resources Swan, the BBI subsidiary which controls the port and rail assets.
In return, BBI would receive the nominal sum of $1 plus a five per cent royalty on all goods shipped from the Balla Balla Port facility.
The deal is still embryonic at this point, with both companies needing to complete due diligence.
The agreement would also be subject to approval from both companies’ boards and shareholders, as well as regulators and relevant government agencies.
If the deal goes ahead, BBI would pay out the required exit terms of the farm-in agreement.
Outlook
BBI is majority owned by Flinders’ major shareholder TIO (NZ). In assessing the proposed deal, the independent Flinders board members — those who are unrelated to TIO — have decided the proposal is worthy of further investigation.
Those independent board members will hold further discussions with BBI on the potential terms of a binding deal.
The company will provide updates as discussions between the parties develop.
Flinders Mines is down 2.17 per cent, trading at $1.35 at 12:33 pm AEDT.