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Drill rigs at Iron Ore Holdings' Iron Valley deposit in the Pilbara.
The West Australian Drill rigs at Iron Ore Holdings' Iron Valley deposit in the Pilbara.

Fortescue Metals has agreed to stop work on the development of Iron Ore Holding's Iron Valley deposit in the Pilbara.

The company said both parties had agreed to the early termination of Fortescue's exclusive option on Iron Valley as previously agreed under the Memorandum of Understanding (MOU) signed on 10 February 2012.

Iron Valley is contiguous to Fortescue's Nyidinghu deposit and the iron ore resource at Nyidinghu extends into Iron Valley in the Pilbara.

The option was due to expire on March 31.

"The joint decision to terminate the option period early was based on the current development focus of each company and agreement that Iron Valley and Nyidinghu will not be developed as an integrated mine in the time frame as contemplated in the original transaction," Fortescue said in a statement.

"The Nyidinghu project is an important part of Fortescue's portfolio of expansion projects and options.

"Further development by Fortescue will be based on customer requirements and market conditions."