Fortescue gains 90% share of Blacksmith Iron Ore Project backer

Australian iron ore miner Fortescue Metals Group (FMG) has now firmed its access to a major undeveloped project in Western Australia's prime iron ore belt in the Pilbara by acquiring a near 90% stake in the company promoting the project, West Perth-based Red Hawk Mining Limited (RHK).

RHK wholly owns the Blacksmith iron ore project consisting of a 112 sq kilometre mining lease that happens to be located 30km west of FMG's Solomon Hub mine that itself has one reserves of 716 million tonnes and where production began in May 2013.

An extensive drilling project RHK conducted between 2008 and 2017 indicated that Blacksmith hosts 243 million tonnes of direct shipping ore with an average Fe grade of 59.3%. Expected to deliver its first ore to market in the fourth quarter of this year, the Blacksmith project would have a capacity of 5 million tonnes/year and a potential life of mine of 23 years, RHK announced in April last year.

Late last month, FMG made a takeover bid for RHK via its wholly owned subsidiary FMG Pilbara that was eventually accepted after FMG lifted its offer price.

"Whilst we firmly believe that the Blacksmith Project has the potential to be a major iron ore project, there is significant cost, time and risk associated with developing a project of this scale, particularly in the context of an uncertain broader global economic outlook," said RHK's Chair Cheryl Edwardes in a statement recommending that FMG's proposal be accepted. "As such, (FMG's offer) provides shareholders with a compelling opportunity to de-risk their investment."

As of February 13, FMG's stake in RHK had reached 89.44%, according to a stock exchange statement.

For FMG, the Blacksmith project is a new opportunity to strengthen the company's position in the iron ore market apart from the miner's Iron Bridge Project in the same Pilbara region, which is anticipated to reach full capacity in the third quarter this year, Mysteel Global learns.

FMG, the world's fourth largest iron ore supplier, shipped 97.1 million wet tonnes of iron ore during July-December last year, the first half of its fiscal year 2025, and the shipment guidance for the whole fiscal year is 190-200 million wet tonnes, as reported.

Written by Irene Zhuang, zhuangailing@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com