Magnitogorsk Iron & Steel Works (MMK) announced it had signed an agreement that provides for the purchase of a 100% stake in the Australian Flinders Mines Limited (Flinders) for 0.30 Australian dollars per share. This comes to 554m Australian dollars for 100% of shares (with a clause regarding all the issued options and special rights). Flinders Board of Directors decided unanimously to accept MMK’s offer and to suggest that the company’s stockholders follow suit.

Now Flinders’ main asset is the iron ore project PIOP in Pilbara, Western Australia. Under the JORC standard, the company’s resources amount to 917.3m tons of high quality iron ore, much of which does not require any additional processing and has the average iron content of 55.2%. The deposit is very promising in terms of further resource exploration. The production is expected to start in 2015 and to produce about 15m tons of ready goods a year.

‘The acquisition of Flinders will allow MMK to get access to the development of a high quality iron ore deposit with great economics and low operational costs and capital investment,’ MMK reports.

‘We’ve made our first step on the way to purchasing Flinders, a promising and hopeful asset, today. I am positive that, with MMK’s support and with the current highly professional management team, Flinders could eventually become one of Australia’s leading iron ore manufacturers. For our company, this deal is another important stage of creating an international highly efficient vertically integrated metallurgical business,’ says MMK BOD Chairman Viktor Rashnikov.

The purchase of a 100% shareholding in Flinders is expected to be completed in March 2012 and depends, among other factors, on getting the necessary agreements and permissions from the Australian regulatory bodies.