According to the Australian IV deal stitched up in 24 days. This management team has shown a true ability to get deals done and he expects to finalise a deal on Bucklands by June. Our current SP prices in Bucklands never going ahead, my money is on the team getting a deal done soon.
Mineral Resources and Iron Ore Holdings in Iron Valley project by: Paul Garvey From: The Australian March 01, 2013
IN a deal involving more than its fair share of Perth's super-rich, Mineral Resources -- which made founder Chris Ellison one of WA's richest men and the owner of Perth's most expensive home -- and the Kerry Stokes-backed Iron Ore Holdings will combine to develop the Iron Valley iron ore deposit. The moves comes just three and a half weeks after a similar agreement between IOH and Andrew Forrest's Fortescue Metals fell apart.
IOH managing director Alwyn Vorster estimates the deal, which will see iron ore miner and mining contractor Mineral Resources carry out all the mining at the project and pay IOH for the ore at the mine gate, has a "conservative" net present value to IOH of about $150 million.
That figure compares with a market capitalisation of less than $170m before the deal was announced.
Having wasted no time in stitching up a deal over the Iron Valley, Vorster will now turn his attention to striking a deal over the group's Buckland deposit.
Vorster completed the Iron Valley deal in just 24 days (including weekends), and has now set himself a deadline of June to secure a joint-venture partner for Buckland.
Buckland, which requires more than $800m to be developed into an eight million-tonnes-a-year mine, is a much bigger and more challenging proposition. But, given the track record of deals Vorster has put together, he has good reason to back himself.
In 2011, IOH sold its Koodaideri South deposit to Rio Tinto for $32m, having spent just $5m on the project. An even better result came out of the Phil's Creek project. The $4m IOH spent on that translated to a price tag of $42m when the deal was struck 18 months ago.
And the $150m NPV attached to the Iron Valley deal -- which Vorster says could ultimately be truly worth several times that -- compares to an outlay to date of less than $25m.
Their willingness to work out the Iron Valley deal so quickly also suggests that IOH and Mineral Resources achieved the seemingly impossible in their previous deal over Phil's Creek -- that is, a deal where both sides felt they got a fair return.
IOH has in the past worked without the need to bring in third-party corporate advisers, but Vorster concedes that might need to change.
IOH Price at posting:
$1.20 Sentiment: Buy Disclosure: Held
