CuFe has signed a binding term sheet for the sale of its iron ore rights at the JWD mine in Western Australia to Newcam (WA) for A$12m in cash.
The transaction awaits shareholder approval and regulatory consents.
As per the terms sheet, CuFe’s sale includes complete interest in the iron ore rights and related assets at the JWD mine.
The deal includes the transfer of all operational contracts, authorisations and contributions to the rehabilitation fund for the JWD mine.
Additionally, stockpiles of iron ore and waste material at the site are part of the agreement.
Newcam will have to provide a A$500,000 deposit and make a A$11.5m payment on completion of the transaction, which is subject to conditions including CuFe shareholders’ approval.
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Wiluna Fe, a wholly-owned unit of CuFe, retains responsibility for current trade creditors, with approximately A$8m due on standard terms and around A$4m payable to Newcam for prior iron ore sales.
WFE also keeps ownership of certain stockpiles, hedge positions and trade debtors, which could result in a net inflow of A$1.5–3m to CuFe upon final settlement.
Key conditions for the transaction’s completion by 31 October 2024 include shareholder approval, the establishment of new offtake arrangements between Glencore and Newcam, and securing all necessary regulatory approvals and third-party consents.
CuFe is preparing for a shareholder meeting to seek the necessary approval for the sale, with the JWD mine set to enter care and maintenance to conserve resources.
CuFe executive director Mark Hancock said: “With iron ore prices remaining volatile and with current price levels below our breakeven cost we feel like now is the time to turn our focus to those assets, which offer greater potential for value creation for our shareholders.
“JWD’s distance from port has always been its major challenge as it makes the mine an inherently higher-cost producer, with haulage cost comprising more than 50% of the mine’s C1 cost.
“We could suspend the mine as we have done before and wait for the market to improve but this consumes cash to ramp down and ramp up and having had the experience of operating it for more than three years we consider the scale of JWD means it is best run as a private business that is very flexible as to how and when the mine operates, which reflects Newcam’s model, so believe this sale is the best way forward.”
