Padbury says Oakajee funding secured

Hours after announcing it had secured $US6.47 billion ($6.89 billion) in equity funding to construct a long-heralded port and rail network at Oakajee, junior explorer Padbury Mining has put its shares in a second trading halt in anticipation of revealing the identity of the investors.

The finance deal announcement this morning sent Padbury's share price skyrocketing in early trade, up as high as 5.2 cents before dropping back to 3.3 cents at the time of the trading halt.

The stock had been trading around 0.4 cents for much of last year before attracting interest from investors and traders over the past three months.

Early this afternoon Padbury announced a trading halt, the second since Wednesday, saying it would resume trading once it discloses the name of its investors on or before Tuesday April 15.

In its initial announcement Padbury said the funding would come from anonymous private Australian equity investors and would be provided in three tranches.

Managing director Gary Stokes told Business News before its trading halt announcement that much of the skepticism about the project's ability to achieve its goal was due to Padbury not naming its investors.

“The fact that the investors want to remain anonymous at this stage it doesn’t help us, but at the end of the day we’ve got to respect their requirements,” Mr Stokes said.

Padbury's plans to develop a deep water port and multi-user open access rail network at Oakajee, north of Geraldton, would enable the export of 35 to 45 million tonnes of iron ore utilising cape sized vessels with up to 240,000 tonne capacity, the company said.

It claims there are about 21 companies with iron ore interests in the Mid West which could utilise the port and rail.

The company's bid to develop a port and rail network at Oakajee comes after decades of failed attempts to secure the ambitious dream.

Plans by Japanese giant Mitsubishi Corporation to develop the infrastructure effectively collapsed in late 2012 when the company cut spending and removed staff from the project, despite claims from the Barnett government that the project was not dead.

Mitsubishi officially suspended work at the project in June last year.

Padbury acquired intellectual property from Yilgarn Infrastructure to develop the project in 2011 and has since been working with consultants to bring its capital and operational costs down.

The company said the project would be developed by subsidiary Midwest Infrastructure, in which investors in the project will obtain a 64 per cent stake with the remaining 36 per cent to be held by Padbury.

Padbury can claw back its shareholding to 49 per cent if it can return the private investment. 

The first tranche of $US470 million will be used for completing design and construct specifications, early civil works and to meet early ordering of long lead items.

The remaing tranches will be used for construction.

Padbury said it was in negotiations with Korean engineering, procurement and construction companies to undertake work from the pre-feasibiility study through to construction completion.

Mr Stokes hailed the deal as a major breakthrough for the company and the Mid West region.

Mr Stokes, a former deputy director-general of the Department of Industry and Resources, told Business News Padbury’s biggest challenge was convincing people the project would succeed.

“Scepticism doesn’t bother me, I’m 150 per cent certain,” Mr Stokes said, speaking from Korea.

“Most of the scepticism is around the fact that this project’s been around for 30 years. Two big players failed.  A little company called Padbury Mining comes along and says it can do it, so there’s healthy cynicism around that and that’s fine.”

Mr Stokes said he didn’t believe Padbury’s relatively smaller size as a miner precluded it from achieving a major project.

“We’ve caught the market a bit by surprise,” he said.

“People go ‘Oh, who the bloody hell is Padbury?’ Well that’s how we planned it. We never planned to come out until we knew we had everything locked away because we always knew there would be a healthy scepticism around a small player achieving what supposedly major companies couldn’t.”

“No company, whether it be Rio or BHP started life as a multi-billion dollar company, but for some reason apparently in this day and age it’s only multi-billion dollar companies that can do these projects. Well, we’re saying that that’s not true.” 

The Chamber of Minerals and Energy welcomed Padbury’s finance deal announcement, saying a port and rail project would have vital economic importance.

“This is an exciting step towards realising the multi-billion dollar prospectivity currently lying dormant in the Mid West” CME chief executive Reg Howard-Smith said.

Geraldton Port Authority chief executive Peter Klein also welcomed the announcement, but declined to speculate on whether the project would be achieved.

“We believe Oakajee port would be a very positive development to the Mid West region and we see its operation as being entirely complimentary to the operation of Geraldton port,” Mr Klein said.