FORTESCUE Metals Group is a step closer to reviving the projects it sensationally halted in September, after selling down its stake in a joint venture with thriving Pilbara junior BC Iron.
Fortescue will get $190 million in cash and will also get early payment of some other costs owed to it by BC Iron, under a deal that will see the 50-50 Nullagine joint venture become 75 per cent owned by BC Iron.
The deal is part of a wider divestment campaign by Fortescue as it seeks to reduce its debt loading, with the company already selling a power station in recent months.
An expansion project known as Kings was the main victim of Fortescue's debt crisis, having been halted when iron ore prices slumped.
The company has since said it would consider restarting Kings in December if the iron ore price held firm around $US120 a tonne, and Patersons Securities analyst Tim McCormack said all the factors appeared to be in place for a restart before Christmas.
''I would be surprised if they didn't restart the Kings project in December and this deal is just another cherry on top. It adds vital liquidity,'' he said.
Fortescue chief executive Nev Power said the deal with BC Iron was a fantastic outcome for both parties. ''The funds provide additional liquidity as we consider a restart of the Kings mine,'' he said.
The deal, which alters a joint venture that was struck in 2009, increases BC Iron's export capacity by 80 per cent to 4.5 million tonnes per annum.
Under that original deal, BC Iron handed over 50 per cent ownership of Nullagine to Fortescue in return for being able to export its product using Fortescue's rail and port facilities.
BC Iron managing director Mike Young was originally criticised for giving away too much to Fortescue, but the deal has proved to be a masterstroke by getting BC Iron into the market while prices were still high.
While most Pilbara juniors now appear terminally stranded by lower prices and a lack of transport infrastructure, BC Iron has shipped more than 5 million tonnes of ore and paid its maiden dividend in September.
Its share price performed better than any other Australian iron ore miner in 2012.
Mr Young has long defended the joint venture by saying it was ''better to have half of something, rather than all of nothing'', and he joked on Monday that he would now have to update that slogan. ''Now I've got 75 per cent of something,'' he said.
Mr Young said the deal would be highly accretive to BC Iron shareholders and was about as low risk as an acquisition could get. ''We know the deposit, we know the management and we like the management.''
BC Iron will take on $130 million in debt to fund the deal, and will seek to raise a further $58 million through a share placement-and-purchase deal underwritten by Macquarie.
Investors seemed to like the deal, lifting Fortescue shares 26¢ to $4.05, with much of those gains made before the deal was announced.