Strike pays $19m for iron, coal projects

Strike Resources Ltd is banking on high iron ore and coal prices to feed the development of its flagship Peru project as it signed a $19 million scrip deal to reacquire two projects from Perth-based Orion Equities Ltd.

Perth-based Strike said it will issue a total of 9.5 million shares to Orion to regain full ownership of the Paulsens East iron ore project in Western Australia and the Berau coal project in Indonesia.

Previously, Strike held a 75 per cent interest in Paulsens East and a 30 per cent interest in Berau.

Shares in Strike last traded at $1.975 at 13:02 AEST, down 2 cents.

Strike chairman John Stephenson said development of Paulsens East and Berau will be accelerated to generate cashflow for the development of the Apurimac iron ore project in Peru.

"By reacquiring full ownership of the Berau thermal coal and the Paulsen's East direct shipping iron ore projects, the Company has significantly bolstered its near term revenue generating potential and its ability to fund its flagship Apurimac Project in Peru," Mr Johnson said.

Strike is targeting a production start up date for Paulsens East in the second half of 2009 with a 1 to 1.5mtpa operation. Strike is also targeting a 2009 production start date for Berau with a 1.5mtpa initial operation before ramping up to 2mpta.

Apurimac is scheduled for commissioning in 2012 and is expected to have a mining rate of 20 million tonnes per annum.