04/06/2009 - 10:16

FIRB approves China stake in Bauxite

04/06/2009 - 10:16

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A Chinese government agency is set to take a 13 per cent interest through a near $10 million placement in East Perth-based Bauxite Resources following Foreign Investment Review Board approval.

FIRB approves China stake in Bauxite

A Chinese government agency is set to take a 13 per cent interest through a near $10 million placement in East Perth-based Bauxite Resources following Foreign Investment Review Board approval.

 

 

The announcement is below:

 


Perth-based bauxite explorer and developer, Bauxite Resources Ltd (ASX: BAU, ''BRL'') has taken another key step towards the development of its 14,400km² Darling Range Bauxite Project after receiving formal approval from the Foreign Investment Review Board (FIRB) for a A$9.85m share placement to Chinese Government agency, the Shandong Provincial Bureau of Geology and Mineral Resources ("SDGM").

Importantly, the placement price is at a premium to the closing price of BRL's shares on 3 June of $0.43, reinforcing SDGM's confidence in BRL's ability to develop its extensive Darling Ranges land holdings into a profitable long-term bauxite production and export business.

Chinese regulatory approval is the only outstanding condition required before the placement takes place, with funds required to be received prior to 30 June 2009. BRL will then proceed with the allotment of 19,700,000 shares to SDGM at a price of $0.50 per share - giving SDGM a stake of 13% in BRL following the placement.

The cash injection will allow BRL to aggressively pursue its bauxite exploration program as well as its Stage 1 direct shipping operation, which the Company intends to commence with a trial spot shipment in the September quarter.

The Board of BRL will continue to foster the relationship built up between itself and SDGM for the benefit of both parties, with SDGM seen as an extremely important strategic ally in facilitating the export of BRL's bauxite to alumina refineries in the Shandong Province of China.

Trial Mining

BRL has completed a successful trial quarrying and bauxite extraction costean programme of some 300 tonnes of bauxite for bulk sample for overseas customers. BRL expects to commence bauxite production at its North Darling Range Project in the September Quarter of 2009 and will initially undertake a trial operation targeting approximately 200,000 tonnes of bauxite.

BRL's Bauxite will be transported to the Kwinana port for direct loading onto the ship loading conveyor and subsequent loading onto Handimax-class ships. The bauxite will be extracted from areas of private, sub-economic freehold degraded farmland where previous drill results have indicated bauxite mineralisation at surface, with grades that are consistent with current potential customers' specifications and requirements.

Summary

Commenting on the FIRB decision, BRL's Managing Director, Mr Daniel Tenardi, said: "We are obviously very pleased that the Shandong Bureau has been granted FIRB approval for this investment and following Chinese Government approval, we will move quickly to finalise the transaction."

"The fact that SDGM has agreed to this placement at a premium to the current share price is a glowing testimony to the potential value that SDGM attributes to BRL's projects. We welcome them as a cornerstone investor in our Company and look forward to a mutually beneficial relationship," he added.

"The funds we receive will put us in a very solid financial position as we ramp up our exploration and development activities ahead of trial mining and, in the not-too-distant future, a full-scale bauxite export business."

Mr Tenardi said the next major milestone would be the trial of a larger scale mining exercise, expected to occur in the September Quarter: "The trial mining exercise will be a full 'dress rehearsal' of all facets of the operation, from the bauxite extraction itself to the transport solutions which includes truck, rail and port infrastructure."

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