Mid-West magnetite hopeful Asia Iron Holdings is targeting a 2012 production start at its flagship $2 billion Extension Hill project near Geraldton, after securing a major state-owned Chinese partner for the venture.
Chongqing Chonggang Minerals Development Investment Limited, a joint venture between Chongqing Iron & Steel Group and the Chongqing Foreign Trade and Economic Cooperation Group, today pledged $280 million to acquire a 60 per cent holding in Asia Iron from its Hong Kong parent, iron ore trader Sinom Holdings.
CCMD, Sinom and Asia Iron said they had also agreed on a number of other, but undisclosed, financing agreements in relation to the transaction and future capital expenditure.
Asia Iron said the first stage of the project, which will produce 10 million tonnes of high grade magnetite concentrate annually, would cost around $US2 billion, with first output slated for 2012.
Asia Iron plans to ship stage one output from the existing Geraldton port, using a slurry pipeline from the mine to the harbour. However, it said the joint venture partners had agreed to also undertake planning for future mine expansion utilizing the proposed Oakajee deepwater port.
Asia Iron's capacity to export through Geraldton has been the subject of conjecture since the Barnett Government recommended that Geraldton's port capacity be capped at 12 million tonnes in order to maximize use of Oakajee once it is operational in late 2013 or early 2014.
Existing miners Mt Gibson Iron and Crosslands Resources already ship almost 5 million tonnes of iron ore from Geraldton annually, while Gindalbie Metals plans to ship around 8 million tonnes of concentrate from stage one of its $1.8 billion Karara magnetite project in 2011.
Sinom chairman Andy Zhang said the deal would give Asia Iron access to CCMD's valuable technical and financial capabilities in return for access to Asia Iron's enormous iron ore resource and growth potential.
"It is clearly a win-win situation for all parties involved," he said.
However, the deal remains subject to the signing of definitive agreements and the completion of regulatory reviews and receipt of applicable approvals in Australia and the People's Republic of China, including Australia's Foreign Investment Review Board.
Asia Iron said CCMD would file applications for approval from both governments shortly.
Extension Hill currently has confirmed magnetite resources of almost 1.8 billion tonnes, and the potential for more than 6 billion tonnes of additional resources.
