Juniors in on steel surge

Junior miners continue to pile into the iron ore sector as China’s appetite for steel continues unabated.

The most recent players are Western Australian-based Murchison Metals and Territory Iron, both of which listed on the Australian Stock Exchange in the past five weeks.

A third WA company, Iron Ore Holdings, is scheduled to list late next month.

The plays follow a flurry of other smaller companies – including Grange Resources, Polaris Metals, AusQuest and Atlas Gold – which emerged earlier this year touting WA iron ore projects, and come as major miners look to negotiate iron ore price rises of up to 100 per cent with Asian steel mills.

Investors have almost doubled their money in Murchison Metals, which offered a one-for-one rights issue to raise $5.5 million to develop its advanced Jack Hills iron ore project in the Murchison. 

Murchison Metals was backed into failed technology company, Weboz, renamed Nicu Metals, which also failed last year after a prospectus containing several WA copper and nickel exploration plays was withdrawn in October with no shares taken up. 

Former Weboz director and Nicu company secretary Ross Lorking is the only previous Weboz/Nicu director to resurface as a director of Murchison, while former Minproc consultant Paul Kopejtka is Murchison executive chairman.

A two-phase development is planned at Jack Hills, the first of which is to mine and truck about one million tonnes of direct shipping grade iron ore a year to Geraldton Port for export to China. The operation is slated to commence late this year.

Murchison is also eyeing larger iron ore deposits at Jack Hills and has proposed to develop an operation mining and exporting 10 to 15mt of iron per year, via a purpose-built rail and port facilities, by 2008.

Investors, however, seemed less impressed by Territory Iron, a Northern Territory-focused iron ore explorer. Despite a strong debut, shares in Territory Iron, which were issued at 20 cents and listed at 33 cents, have drifted down to 25 cents.

Chaired by former Hamersley Iron executive director Malcolm Richmond, Territory Iron plans to revive the Frances Creek Iron Ore operations, about 200 kilometres south of Darwin. It anticipates initially exporting 1mt to 2mt of iron ore to China with the help of a marketing agreement with its 25 per cent shareholder, Singapore-based ASX listed investment group, OM Holdings.

Further iron ore exploration upside is also touted in three of Territory Iron’s other less advanced projects in the NT.

The third float, Iron Ore Holdings, is currently looking to raise $6 million to prove up iron ore deposits at four projects in the well-explored Pilbara region, adjacent to some of BHP Billiton’s and Hamersley Iron’s mines.

Hogan and Partners is broker to the issue, while the board is chaired by Malcolm Randall, a former Hamersley Iron employee and commercial adviser to the Hope Downs Pilbara iron ore project.

Junior Plays

• Territory Iron: Raised $10 million for 1-2 mtpa Frances Creek project, NT. 
• Murchison Metals: $5.5 million for 1 mtpa Jack Hills project, WA.
• Iron Ore Holdings: Targeting $6 million to explore four Pilbara projects, WA.