It is reported that Kazakhstan Eurasian Natural Resources Corporation group has completed a USD 670 million deal to buy another 50% of ordinary shares in Brazil Bahia Minerals BV from Ardila Investments NV and also got an option allowing it to buy an adjoining project for up to USD 150 million

The group now owns 100% of BMBV. ENRC bought the first 50% in BMBV in May 2008 for USD 306 million. BMBV, a subsidiary of Zamin BM NV, is a sole shareholder of two Brazilian companies, Bahia Mineracao Limitada and Eire Mineracao Limitada.

The payment of USD 167.5 million was made from ENRC existing cash resources. The remaining USD 502.5 million will be paid off in two installments of USD 167.5 million and USD 335 million respectively.

ENRC can exercise an option until November 15 to buy a firm that owns the adjoining project Greystone Mineracao do Brasil Limitada. It has an iron ore resource base of 147 million tonnes with an average iron content of 31.8% and an additional potential resource of 187.5 million tonnes.

Dr Johannes Sittard chairman of London listed ENRC told Reuters that the deal to buy the rest of the BML project in Brazil is not the end of the group's takeover strategy. He told “We are generating substantial cash flow and the market still looks solid for the last quarter, which will help us maintain our cash balance. We see no reason why we should not continue to look for the right projects."

The latest deal had its genesis when ENRC bought half of Bahia in 2008 for USD 306 million, but since then an exploration program has identified more resources in the deposit and an updated feasibility study was completed in July. Bahia Minerals now has an iron ore resource base of 1.8 billion tonnes with an average iron content of 32%.

Bahia's BML project is expected to produce 19.5 million tonnes of iron ore concentrate a year by 2014 at a capital cost of about USD 2.1 billion.

(Sourced from Reuter)