Diversified resources company Mineral Resources (MinRes) has agreed to divest a minority stake of 49% in the Onslow iron project’s haul road in Western Australia to Morgan Stanley Infrastructure Partners.
The deal values 100% of the asset at A$2.7bn ($1.8bn).
In line with the transaction, MinRes is expected to receive total proceeds of A$1.3bn ($863m). This includes an upfront consideration of A$1.1bn ($730m) and a deferred consideration of A$200m ($133m).
The deferred payment is contingent upon achieving a run rate of 35 metric tonnes per annum (Mtpa) for any quarter before 30 June 2026.
The 150km dual-lane road connects the Ken’s Bore mine site to the Port of Ashburton.
It is said to be an essential part of MinRes’ transportation infrastructure solution, enabling access to previously stranded iron ore deposits in the West Pilbara region of Western Australia.
Besides, the Onslow iron project’s haul road will be fully sealed, fenced and equipped with fibre optic cabling to support the operation of the diversified resources company’s autonomous road trains.
Upon the completion of the deal, the Australian company will retain majority ownership and exclusive rights to use, operate, and maintain the haul road.
MinRes has signed for a $750m undrawn facility with J.P. Morgan, which will be terminated upon or before the completion of the transaction.
MinRes managing director Chris Ellison said: “This transaction is a strong endorsement of Onslow Iron’s world-class credentials, after the project last month delivered first ore on ship ahead of schedule.
“As the first transaction of its kind in the Australian iron ore industry, it showcases the considerable value of MinRes’ portfolio of infrastructure assets and our ability to unlock significant capital.
“The transaction also establishes access to a new pool of capital to further accelerate our growth and continue to deliver returns for our shareholders.”
Located in the west Pilbara region, the Onslow Iron project is being developed by MinRes, in a joint venture partnership with Red Hill Iron Joint Venture (RHIJV) partners Baowu, POSCO, and AMCI.
Subject to finalisation of project conditions and the Australian Foreign Investment Review Board (FIRB) approval, the deal is anticipated to be completed in the second half of 2024.
J.P. Morgan and Herbert Smith Freehills are financial and legal advisers, respectively, for MinRes in the deal.
