MOSCOW, November 25, 2011 - Magnitogorsk Iron and Steel Works OJSC (LSE: MMK) (“MMK”) today announces the execution of a Scheme Implementation Agreement to effect the acquisition of Flinders Mines Limited (ASX: FMS) (“Flinders”) by MMK. MMK has offered to acquire 100% of the issued shares in Flinders at A$0.30 cash per share (“Offer”), implying a fully diluted value for Flinders of approximately A$554 million. Flinders’ Board of Directors unanimously recommends that all Flinders shareholders vote in favour of the acquisition.
Flinders’ flagship asset, the PIOP (Pilbara Iron Ore Project), is located in the West Pilbara region of Western Australia. The PIOP has a large 917.3Mt JORC-compliant resource of high quality direct shipping and easily beneficiable feed ore with average grade Fe 55.2% and significant potential for further resource upgrades. Production at PIOP is scheduled to commence in 2015 with estimated annual volumes of 15 mln ton of saleable product.
With this transaction, MMK will gain access to a high-quality iron ore development project with a substantial resource base and robust economics with low operating and capital costs.
MMK Board of Directors Chairman Victor Rashnikov said, “I am delighted to announce our agreement to acquire 100% of Flinders Mines. With the support of MMK and under the continued leadership of their professional management team, I am confident that Flinders will develop into a leading iron ore producer in Australia.” Mr. Rashnikov continued, “This transaction represents another important step forward for MMK to become highly efficient vertically integrated international metals and mining company.”
The transaction is subject to regulatory approvals in Australia and is expected to close in March 2012.