BC Iron and Cleveland ink Brazil deal
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Pilbara iron ore miner BC Iron and Cleveland Mining plan to take a joint majority stake in three projects in Brazil.
The miners have signed two agreements to earn the rights to acquire up to 80 per cent of three separate iron ore exploration projects in the Brazilian states of Salvador da Bahia and Minas Girais.
BC and Cleveland have investigated more than 50 South American iron ore projects since they formed an alliance nine months ago.
The proposed acquisitions would be the their first foray into iron ore projects in Brazil.
Outgoing BC Iron managing director Mike Young said the deal structure was consistent with the companies' approach to potential growth opportunities in Brazil, including relatively small upfront expenditure and a tight, commercial relationship with the vendors.
"The main game for BC Iron is, as always, maintaining its focus and operational efforts on the Nullagine joint venture and considering growth potential in the Pilbara," Mr Young said in a statement.
He said the Brazil deal included early stage greenfield opportunities.
The Salvador da Bahia and Minas Girais projects are 194 km2 and 1,070 km2 respectively.
Rail infrastructure is under construction at Bahia while a rail line is proposed at Minas Girais.
"These rail lines will connect to open access ports which are capable of loading cape-sized vessels with iron ore," BC Iron said in a statement.
The two Perth-based companies hope to obtain iron ore grades in the range of 30 to 45 per cent.
First payment under the proposed deal will not be made until after initial due diligence, which includes a satisfactory drilling program.
Cleveland said the three project areas had the potential to host more than one billion tonnes of iron ore.
It comes as BC Iron plans to extend its Nullagine mine life in the Pilbara region of Western Australia.
Shares in BC Iron were two cents lower at $3.09 while Cleveland shares were one cent lower at 16 cents at 1436 AEST.