19/09/2008 - 11:54

Australasian project financing delayed

19/09/2008 - 11:54

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The finance offer deadline for Australasian Resources Ltd's Balmoral South iron ore project has been pushed back by six months following recent merger developments with billionaire Clive Palmer.

The finance offer deadline for Australasian Resources Ltd's Balmoral South iron ore project has been pushed back by six months following recent merger developments with billionaire Clive Palmer.

The company and its project partner Shougang have agreed to re-set the deadline to March 31 2009. Previously the deadline was set at September 20.

Under the funding deal, Shougang has exclusive rights to provide a finance offer to Australasian.

Australasian said the delay is attributable to a merger proposal received from Mr Palmer's Resource Development International Ltd, and also to allow completion of some key project components including the location of a processing plant and the construction of the Cape Preston port.

"In light of recent developments, which materially affect the findings of the recently completed Bankable Feasibility Study, it was important for the project partners to work in a collaborative fashion to look at the implications of these events and ensure we move the project forward in the most strategic manner," Australasian managing director Andrew Caruso said.

"While this has led to a slight delay in terms of the receipt of the Finance Offer for the project it will have no material affect on the proposed development timeframe for the world-class Balmoral South Iron Ore Project, with production from the project still anticipated to commence in late 2011."

 

Below is the full announcement:

 

Australian iron ore company Australasian Resources Ltd ("Australasian") (ASX: ARH) has, together with Balmoral South project partner Shougang, agreed to re-set the Finance Offer deadline from 20 September 2008 to 31 March 2009.

Under the original Susan Palmer Deposit Project Agreement, which covers the joint development of the Balmoral South Project located on the coast in the Pilbara region of Western Australia, Shougang has exclusive rights to deliver a Finance Offer to Australasian's wholly owned subsidiary International Minerals Pty Ltd ("IM") which would provide the necessary funding to implement the Project. This was to have occurred by 20 September 2008.

In light of the merger proposal received from Resource Development International Ltd ("RDI"), and to allow completion of some key project components to support funding requirements, the Balmoral South development partners have agreed to the re-setting of the Finance Offer deadline until 31 March 2009.

These key project components include the completion and agreement between the parties of the:

o final technical specifications and assessment of the relative commercial benefit of:
locating the proposed pellet plant in China whilst still maintaining ARH's proposed ownership stake in the facility (50%) if Shougang elect to proceed; and
constructing a deep water port at Cape Preston instead of utilising the currently proposed trans-shipment facility; and
o final construction proposal and contract from Shougang.

On 6 August 2008, Australasian advised that it had entered into a Merger Implementation Agreement with RDI1. Under the proposal, and subject to shareholder and Court approval, Australasian would become a subsidiary of RDI and manage the development of the enlarged company's iron ore assets, which are expected to include rights to mine up to a further 20 billion tonnes of magnetite iron ore from the broader Balmoral deposit.

Activity regarding this transaction is progressing, with the company likely to make further comment in the coming weeks.

Shougang Holdings (Hong Kong) Ltd Director, Mr Michael Chen, stated "Shougang remains 100% committed to the ongoing advancement of the Balmoral South project towards the aim of achieving a Finance Offer. Shougang will be well positioned to support the current project construction milestones once funding is in place."

Australasian Manager Director. Andrew Caruso, believes in light of the RDI proposal and the need to complete key project items to support the Finance Offer, it was prudent for the project partners to re-set the deadline to receive the Finance Offer.

"In light of recent developments, which materially affect the findings of the recently completed Bankable Feasibility Study, it was important for the project partners to work in a collaborative fashion to look at the implications of these events and ensure we move the project forward in the most strategic manner," Mr Caruso said.

"While this has led to a slight delay in terms of the receipt of the Finance Offer for the project it will have no material affect on the proposed development timeframe for the world-class Balmoral South Iron Ore Project, with production from the project still anticipated to commence in late 2011."

Recently appointed advisory bank, BNP Paribas, continues to work with project partners to provide further guidance on likely project funding requirements with Chinese policy banks.

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