Iron ore explorer Brockman Resources says it is in advanced talks with Fortescue Metals Group Ltd for a rail haulage, port access and marketing service for its Marillanna project in the Pilbara.
Without a transport and export solution for product from its flagship project in the state's Pilbara region, Brockman's ore would have been "stranded".
"A term sheet reflecting the key principles for a binding heads of agreement is currently being negotiated with FMG," Brockman said in a statement on Thursday.
"There can be no guarantee that the current negotiations will result in a binding agreement, and any agreement is likely to be subject to the satisfaction of a number of conditions.
"However, Brockman's board is highly encouraged with the progress of negotiations."
Brockman said a binding deal with Fortescue would be a critical step towards development of the Marillana project, providing infrastructure solutions at commercial rates while enabling the explorer to complete a bankable feasibility study in the second quarter of calendar 2011.
Brockman also formally rejected Hong Kong group Wah Nam International's hostile scrip offer.
Releasing its target statement today, Brockman said it had "serious concerns" about the underlying value of Wah Nam's bid, which notionally valued Brockman at $6.47 per share.
In particular, Brockman said the underlying value and liquidity of Wah Nam's stock remained "unsubstantiated", stating Wah Nam had given insufficient information to assess the value of its loss-making Damajianshan copper mine in China, or its low-margin Hong Kong limousine business.
It said Wah Nam's only readily assessable assets were it's equity stakes in Brockman and fellow Pilbara junior FerrAus Resources. Wah Name owns 23 per cent of Brockman and 19 per cent of FerrAus, which is also subject to a bid from the Hong Kong-listed firm.
Brockman said the bid was also highly conditional, noting it was subject to 13 defeating conditions, and that Wah Nam's strategy relied on it successfully acquiring control of both Brockman and FerrAus.
Furthermore, Brockman stated it did not need Wah Nam's assistance to develop Marillana, given its successful completion of feasibility studies and its initiatives to secure port and rail access.
Brockman shares were 4 cents higher at $4.94 in late trade.
