10/09/2009 - 00:00

Chinese interests target iron ore juniors

10/09/2009 - 00:00

Bookmark

Save articles for future reference.

CHINA has expanded its presence in the state's resources sector with several deals collectively valued at $124 million struck this week.

Chinese interests target iron ore juniors

CHINA has expanded its presence in the state's resources sector with several deals collectively valued at $124 million struck this week.

State-owned steel buyer China Railway Materials Commercial Corporation (CRMC) signed binding deals to buy substantial shareholdings in iron ore juniors United Minerals Corporation and FerrAus.

The company has been on the hunt for sizeable iron ore investments and off-take deals for some time, after the state government awarded Oakajee Port and Rail Pty Ltd the contract to develop the $4 billion Oakajee port, north of Geraldton.

CRMC was the largest financial backer in Yilgarn Infrastructure's proposal for the Mid West port and rail project, the only other competing application.

Under the United Minerals deal, CRMC will make a $27.2 million investment for an 11.38 per cent shareholding, with the placement subject to the finalisation of a 10-year, 3 million tonnes a year off-take deal.

Funds raised from the placement and a planned $1.5 million rights issue will be used to accelerate work on the Railway iron ore deposit in the Pilbara.

The same investment deal has also been negotiated, albeit at a smaller level, with Adelaide-based FerrAus, which holds several iron ore projects in the Pilbara.

CRMC has agreed to buy a 12 per cent interest in FerrAus for about $12.6 million in what the company claims is a "landmark" step towards establishing local infrastructure to transport its iron ore to market.

FerrAus chairman John Nyvlt said the company hoped to send ore to an existing railway line, and CRMC had agreed to help source finance for the move.

The new rail link would have to be up to 80 kilometres long to join FerrAus' operations with existing lines operated by either BHP Billiton or Fortescue Metals Group.

Meantime, West Perth-based Energy Metals has recommended a takeover bid by China Guangdong Nuclear Power Holding Co (CGNPC) for 70 per cent of its shares.

The cash offer of $1.02 for each share is valued at $84 million. Energy Metals' 40 per cent shareholder, Jindalee Resources, has indicated it will accept the bid in the absence of a superior offer.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options