13/08/2008 - 15:21

Golden West, Portman battle heats up

13/08/2008 - 15:21

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Portman Ltd has turned up the heat in its battle with junior iron ore company Golden West Resources Ltd, which has recruited a senior Rio Tinto manager as its new chief executive one day after signing a Chinese iron off-take deal.

Golden West, Portman battle heats up

Portman Ltd has turned up the heat in its battle with junior iron ore company Golden West Resources Ltd, which has recruited a senior Rio Tinto manager as its new chief executive one day after signing a Chinese iron off-take deal.

The two announcements will shore up Golden West's defence against Portman's bid to replace two directors with its own nominees.

Former Rio chief operating officer David Rose has agreed to take the chief executive seat at Golden West.

Mr Rose was previously responsible for Rio's projects in Brazil, India and Guinea including the $6 billion Simandou project. Prior to that, he was the managing director of Rio's Argyle Diamonds.

Mr Rose's appointment comes ahead of a GWR shareholder meeting requisitioned by Portman which wants to replace GWR chairman Con Markopoulos and director Michael Wilson with its managing director Richard Mehan and Paul Piercy.

While quiet on the latest appointment, Portman, in a letter to shareholders, said it was "concerned" by Golden West's 15-year offtake agreement for the Wiluna West iron ore project in the Mid West region.

Yesterday Golden West announced it had signed the deal with Chinese steelmaker Hunan Valin Steel Tube & Wire Co Ltd, which will take 4.5 million tonnes of iron ore each year.

Hunan will also subscribe to $27 million worth of shares for an 11.4 per cent stake.

Portman said today it was surprised Golden West had entered into an offtake deal at such an early stage of the project's life, which is currently in scoping study stage.

"Portman is also surprised that Golden West has summarised a pricing schedule which is purported to apply before the commencement of operations at Oakajee Port, as it has not outlined an alternative rail and port system from which it would propose to ship ore from Wiluna West before Oakajee becomes operational," Mr Mehan said.

Yesterday Golden West said the prices for the iron ore will be set at the completion of the Oakajee port to the lowest published benchmark iron ore price, as negotiated between BHP Billiton and Rio Tinto with Asian steel mills.

Portman also reiterated its concerns over the proposed acquisition by Golden West of the Joyners Find tenements and a placement of up to 50 million shares, which when combined with Hunan's share placement, could dilute shareholders interest by as much as 39 per cent.

The shareholder meeting is scheduled for August 29.

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