HANCOCK Prospecting has reached an out-of-court settlement with its Pilbara Hope Downs project’s South African joint venture partner, Kumba Resources. According to reports, the deal involves a $5.1 million option to cut Kumba out of the joint venture, expiring on July 1. In order to acquire Kumba’s 49 per cent interest, Hancock is understood to have to pay Kumba $231.4 million upfront or make an instalment of $137.9 million, with another $103.8 million in 12 months. Another option open to Hancock is to find an alternative joint venture partner before the July 1 deadline. The Hope Downs project, about 75 kilometres north-west of Newman, was left in the control of Hancock after a December arbitration ruling. Kumba was seeking to have the decision overturned by appeal in the WA Court of Appeal last week but the settlement made that course redundant. In a statement, Hancock’s owner Gina Rinehart, who is understood to have been personally involved in the transaction, indicated that the option price had been decided on the project’s value at December 5 2003, when mining giant Anglo-American was deemed to have assumed control of Kumba. Financial advisory firm KPMG was hired to provide advice to Ms Rinehart in the deal. It has also been reported that Ms Rinehart is on track to obtaining bank finance for the $2 billion development of Hope Downs. If the project is to go ahead, the partners must lodge a formal development application with the State Government by June 30 under the terms of a 1992 State Agreement. State Development Minister Clive Brown extended the deadline to that agreement last December. Kumba has been involved in the project since 1998, when its then parent, Iscor, funded a feasibility study into the project, thereby earning a 49 per cent interest. The deal follows other recent developments in the Pilbara iron ore industry, among them opposition from a cartel of 16 Chinese steelmakers to BHP Billiton’s demand for an extra $US7.50 to $US10 per tonne of ore from its Pilbara mines. Also, Andrew Forrest continued efforts to get his $1.85 billion Fortescue Metals Group Chichester Range project off the ground after his Chinese partners expressed doubts about the quality of the resource. FMG had previously been touted as a potential partner to Hope Downs in the development of rail and port facilities for the project. In addition, former local iron ore miner Portman Mining was recently acquired by US-based Cleveland Cliffs after Rio Tinto and others negotiated a 71.5 per cent increase in the price of ore sold to Japanese steelmakers.