17/04/2007 - 11:37

Yilgarn signs $1.5bn debt financing deal for Oakajee project

17/04/2007 - 11:37

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Mid West resources group Yilgarn Infrastructure Ltd's bid to build port and rail infrastructure to service the region's growing iron ore province took a big step today with the signing of a $1.5 billion financing deal with a Chinese bank.

Yilgarn signs $1.5bn debt financing deal for Oakajee project

Mid West resources group Yilgarn Infrastructure Ltd bid to build port and rail infrastructure to service the region's growing iron ore province took a big step today with the signing of a $1.5 billion financing deal with a Chinese bank.

Yilgarn is in a contest with Murchison Metals Ltd and Midwest Corporation Ltd to win government and industry support for plans to build a $2 billion port at Oakajee and a rail network to service new mines planned for the area inland from Geraldton.

Yilgard said it had signed a debt-financing deal with the Export-Import Bank of China, following its recent a memorandum of understanding with the China Overseas Engineering Corporation to conduct a feasibility study on the Mid-West project.

According to the Economist magazine Chinese foreign direct investment risen from zero in 2002 to $12 billion, as Chinese businesses start to export capital.

The Mid West has been of significant interest to the Chinese, which have invested in several resources players in an effort to put a footprint on vital commodities.

 

 

The full text of a Yilgarn announcement is pasted below

The proposed $2 billion Oakajee Port and Rail Project in Western Australia's Mid West Region has taken a giant step closer to reality, with Yilgarn Infrastructure Limited securing the support of the Export-Import Bank of China (EXIM Bank).

Chairman of the WA-based company Dr John Saunders said a Letter of Intent, signed in Perth late yesterday between the two parties and Chinese rail infrastructure provider China Railway Materials Commercial Corporation, provided a conditional undertaking by the Chinese Central Government-owned bank to fund Yilgarn's project.

EXIM Bank General Manager Zhang Zuijun and a study team flew to Perth from Beijing to sign the document and meet senior representatives from the WA Government departments of Industry and Resources and Planning and Infrastructure.

The commitment, which would amount to about $1.5 billion debt-finance, is contingent on economic and financial feasibility assessments by the Chinese Government and EXIM Bank and the approval of the WA Government for Yilgarn to proceed with the rail and port construction.

It follows a recent agreement signed between Yilgarn and one of the world's top engineering contractors, the China Overseas Engineering Corporation (COVEC, part of the China Rail Engineering Corporation CREC) to undertake the definitive feasibility study of its proposed multi-user railway in WA's Mid West Region.

"This is a significant milestone for Yilgarn and for the Oakajee Port and Rail Project, representing a huge vote of confidence in the future of the Mid West region as a potential world-class iron ore producer," Dr Saunders said.

"A Chinese bank investment of this magnitude in the Mid West will ensure iron ore market demand, providing long-term commercial security for the iron ore industry and sustainability for the region. It means China has a vested interest in the product of local mines whatever price or economic fluctuations occur.

"This agreement demonstrates Yilgarn's plan for independently-owned infrastructure designed to service multiple mine customers with guaranteed third-party access is the best way forward for the competitive growth of the Mid West, providing an attractive proposition for investors and for local industry."

Dr Saunders said the Oakajee Port and Rail Project was vital to allow the expansion of the Mid West iron ore industry. Existing ore exports were trucked to Geraldton and shipped through Geraldton Port (25km south of Oakajee), which was due to reach capacity by 2009.

There are 10 planned and potential iron ore mines (stranded deposits) in the Mid West whose development depends on the provision of new rail and port facilities.

"Our rail, aligned to service junior mines and existing mines while also allowing stranded deposits to be realised, will enable iron ore to be delivered to export markets at the most competitive prices while providing the greatest economic and social benefit for the region - and indeed the nation," Dr Saunders said.

"Without new port and rail infrastructure that can be accessed by all mines, the Mid West iron ore industry and the region cannot realise its full potential."

Project Update

  • Project Definition Document officially submitted to Western Australian Government
  • Pre-feasibility port and rail engineering, financial and commercial studies complete
  • Project Owners' Requirements complete
  • WorleyParsons Services Pty Ltd engaged as Yilgarn's "Owners' Engineer"
  • Memorandum of Understanding signed with COVEC to undertake the definitive rail infrastructure feasibility studies
  • MOU with Chinese partner to undertake definitive port feasibility studies being finalised

Yilgarn has been undertaking presentations and briefings with a range of stakeholders, Government Ministers and agencies including (but not exclusive to):

  • WA Government Ministers, including the Office of the Premier
  • Local Members of Parliament
  • Oakajee Port Director Ian Williams
  • The Office of Development Approvals Coordination
  • The Department of Industry and Resources
  • The Department for Planning and Infrastructure
  • LandCorp
  • Local mines
  • Mid West community groups and local government authorities
  • Geraldton Port Authority
  • Yamatji Land and Sea Council (preliminary stakeholder consultation - detailed Aboriginal heritage and community consultation to be undertaken)
  • Existing and potential Chinese partners in Beijing

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