BC Iron will take over Kerry Stokes’ Iron Ore Holdings, after recently increasing its share in the company to 90.37 per cent.

Iron Ore Holdings is developing a $774 million mine in the Pilbara, tipped to produce eight million tonnes of iron ore each year.

BC Iron already has key assets in the Pilbara, its core focus being the Nullagine Iron Ore Project in a joint venture with Fortescue Metals.��BC Iron achieved a significant and historical milestone by becoming the first junior mining company to access and utilise third party rail owned by Fortescue.�The Nullagine Joint Venture uses Fortescue`s infrastructure at Christmas Creek, 50km south of the mine, to rail its ore to Port Hedland from where it is then shipped directly to customers overseas.

The Iron Ore Holdings board had said a combined entity was better able to operate under challenging market conditions than either BC Iron or IOH standing alone.�The combined ore reserves of BC Iron and IOH will now be enormous.

Enormous reserves, strong cash position and low debt

While this final offer seems a strange move in the context of the current iron ore market (since the takeover was announced, iron ore prices have unfortunately slumped 19 per cent), the merger will put BC Iron on a solid footing with enormous reserves, a strong cash position and low debt.

Resource markets are cyclical and BC Iron will be well positioned for when the market begins to improve.

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