24/07/2012 - 11:08

Cazaly signs Esperance port agreement

24/07/2012 - 11:08

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Cazaly managing director Nathan McMahon.

Aspiring iron ore miner Cazaly Resources has announced agreements with engineering company Engenium and the Esperance port authority, which it hopes will provide short-term and long-term infrastructure solutions for its Parker Range project.

Cazaly has signed a ‘capacity reservation deed’ with the Esperance port authority, providing it with a five million tonne per year allocation at the port.

This is subject to a planned expansion of the port capacity occurring and commercial terms being entered into with the operator of the proposed facility.

Cazaly joins an unspecified number of aspiring Yilgarn-region iron ore miners to have signed a capacity reservation deed with the Esperance port authority. The best known example is Cashmere Iron, which has run into funding problems after signing a similar agreement in 2011.

Managing director Nathan McMahon said Cazaly was the only company – out of a dozen aspiring iron ore miners in the Yilgarn – to have completed a definitive feasibility study.

The DFS is based on production of 4.2mt pa of hematite ore at the Parker Range mine.

“It appears to me we are very well placed for an (export capacity) allocation,” Mr McMahon said.

“The deed indicates that we have a very good seat at the table.”

The port authority issued a statement saying that "the intent of these deeds is to provide certainty to those junior miners that they will have access to any capacity that is built at Esperance", but added that the deeds "have a number of precedent conditions, and do not provide automatic entitlement to any new capacity".

Meanwhile, Cazaly has signed a separate agreement with Engenium, to evaluate interim shipping options, most likely at Albany or Bunbury, prior to the expansion at Esperance being completed.

Mr McMahon said the company could commence exports within seven months, if it was able to secure port capacity.

It had previously sought export capacity at Kwinana, but that allocation was granted to Mineral Resources, which has subsequently commenced exports from its Carina mine.

Engenium, which is an experienced project manager focused on rail logistics, is expected to complete its review of interim infrastructure options in the current quarter.

Mr McMahon said Cazaly could commence exports at a lower volume (than 4.2mt) if it was able to secure export capacity at either Albany or Bunbury.

The planned expansion at Esperance, likely to cost in excess of $600 million, is at an early stage of evaluation.

The port authority has recently completed a market sounding exercise for the expansion, which attracted more than 60 responses.

It is aiming to advertise a request for proposal early next year with a view to selecting a preferred proponent in the third quarter of 2013.

The proposed expansion would be funded, built and managed by the private sector, and lift annual export capacity from 11mt to 20mt.

Separately, the port authority has contracted John Holland to complete a $120 million upgrade of road and rail links to the port.

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