Western Australian iron ore junior Cazaly Resources Ltd faces troubled times ahead in the wake of the state government's decision over the Shovelana iron ore lease.
Western Australian iron ore junior Cazaly Resources Ltd faces troubled times ahead in the wake of the state government's decision over the Shovelana iron ore lease.
Shares in the company have taken a nose dive today as the market reacts to Resources Minister John Bowler's decision to award the potentially lucrative Shovelana mining tenement, in the state's Pilbara region, to resources giant Rio Tinto.
Cazaly shares had risen from around the 50 cent mark, prior to it staking Shovelana, to close at $2.12 on Friday before the decision was made.
Cazaly began trading at 45.5 cents this morning before recovering to 70 cents in early afternoon trade.
The market capitalisation of the company has fallen from more than $100 million on Friday to around $36 million today at 1230 AWST
Its joint managing directors, Nathan McMahon and Clive Jones, are also feeling the financial pain from the decision.
Mr McMahon has a beneficial interest in just over 5 million ordinary Cazaly shares, meaning the Shovelana decision has reduced his interest in the company from $10.6 million at close business Friday to around $3.1 million at lunch-time today.
Mr Jones' holding has been hit to the tune of around $5.8 million over the same period of time, down from an approximate value of $8.6 million at close of trade Friday, to around $2.8 million today.
The Shovelana tug-of-war began when Cazaly pegged the lease after Rio had inadvertently let it lapse.
Rio then appealed to the government, saying that it was in the public interest that it controlled the lease.
After months of speculation the government, through minister Bowler, announced on Friday that it had ruled in favour of Rio.
Cazaly managing director Nathan Macmahon has called for a full explanation as to the reasons for the government's decision and is seeking legal advice.
The state opposition has also voiced its concerns over the decision, with leader Paul Omodei calling for an explanation of the decision, and questioning the time it had taken to arrive at the decision.
In making the decision Mr Bowler said that he had carefully examined the case and was satisfied that the public interest was best served by terminating Cazaly's application to explore the Shovelanna deposit.
When contacted today by WA Business News, Mr Bowler's office said that there would be no further comment on the issue.
