Subiaco-based Aurox Resources Ltd has announced the signing of a second 15-year sales agreement over its Balla Balla vanadium and hematite project, with private Chinese steel mill RockCheck Steel Group Company.
Subiaco-based Aurox Resources Ltd has announced the signing of a second 15-year sales agreement over its Balla Balla vanadium and hematite project, with private Chinese steel mill RockCheck Steel Group Company.
The full text of a company announcement is pasted below
Aurox Resources Limited announces the signing of a second long term Sales Agreement with RockCheck Steel Group Company Ltd ("RockCheck Steel") which will enable the company to double the size of the Balla Balla iron ore project to 6 million tonnes per annum ("tpa").
The agreement with RockCheck Steel, one of China's top 10 privately owned steel mills, is for the supply of 3 million tpa of iron ore concentrate from the Balla Balla project. The announcement follows the signing in March 2007 of a 15 year, 3 million tpa agreement to sell Balla Balla iron ore concentrate to Chengde Iron & Steel Group Company ("Chengde").
Commenting, the Managing Director of Aurox Resources, Mr Charles Schaus, said: "We are delighted to have secured a long term off take agreement with one of China's largest steel mills and to welcome them as a shareholder in Aurox Resources."
"This agreement paves the way for the staged doubling of the size of our Balla Balla project to 6 million tonnes per annum cementing Aurox's position as a key participant in the Pilbara iron ore region."
"The added scale also has the potential to provide economies of scale to the Balla Balla iron ore project", he said.
Similar to the agreement with Chengde, the agreement with RockCheck Steel links the concentrate sales price directly to the 'Hamersley Premium Fines price' negotiated annually between the world's major steel producers and Australian iron ore suppliers.
Also today the Company announces that RockCheck Steel and associated metals trading house, Falcon Resources Limited ("Falcon"), will invest respectively $10.4 million and $1.04 million by way of private placement of ordinary shares. RockCheck Steel and Falcon will invest the funds under the same equity terms and conditions as the capital raising announced on 11 July 2007 by subscribing for a total of 13.4 million new ordinary shares at $0.85 each. In addition to these terms, and subject to the ASX Listing Rules, RockCheck Steel may participate in a future equity raisings by the Company conducted in the next 3 years to the extent required to maintain its 10% shareholding.
Today's announcement follows the announcements last week of a $91 million capital raising by way of placement of shares and convertible notes to local and global institutional and sophisticated investors to fund the development of the Balla Balla project. Funds raised from the placement to RockCheck Steel and Falcon will also be applied towards development of the Balla Balla project. The placement to RockCheck Steel and Falcon will require shareholder approval and will be included on the agenda for the general meeting of shareholders proposed to be held in late August 2007.
This Sales Agreement will allow Aurox to increase planned output from 3 million tpa to 6 million tpa once the relevant government and environmental approvals are secured.
