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This micro-cap iron miner is one for the watch list

Mining is picking up in the last months of 2013, and there are a number of small- and micro-cap iron ore miners that are trying to put the mine, rail and port links together to move into production. One is Iron Ore Holdings (ASX: IOH), which holds the Iron Valley mine in Western Australia.

Mining approval above the water table was given by the Department of Mines and Petroleum in late August, with several other approvals still pending. If and when the final approvals come, Mineral Resources (ASX: MIN) will be in charge of developing the mine on Iron Ore Holding’s behalf.

In preparation of the development, the company has sold off its North Marilanna group of tenements for an initial $2.5 million and another $5.25 million based on development milestones. Also, it moved closer to the development of its own port facilities when it received environmental approval from the federal government back in May.

The probable ore reserves of the Iron Valley mine are 134.7 million tonnes, and once in production, the ore will transported by road to its proposed Cape Preston East port site just within 5 km of CITIC Pacific’s own developed port facilities.

Fortescue Metals Group (ASX: FMG) previously bought a 13-month option on the Iron Valley mine, which is adjacent to its own mining areas, for $25 million in 2012, but because of the change in the mining industry from a fall in iron ore spot prices, it wasn’t likely to proceed with the option.

Due to expire at the end of March, in early February Iron Ore Holdings bought the option back for $4 million, and plans to handle the development itself.

Investors are waiting for the final approvals to come in. In the last nine years, each year has seen net losses, and those losses have been getting bigger in the most recent years as it prepares to move into development.

Its share price is at $0.91 and its net tangible assets per share is $0.46. It has no debt, and had $74.5 million in cash as of 31 June. Some investor groups are starting to move on the share registry to position themselves for when the final approvals come in.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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