Atlas, Aurox Merger Clears Final Hurdle

Atlas, Aurox Merger Clears Final Hurdle

The merger between Australian iron ore miners Aurox Resources and Atlas Iron have cleared its final regulatory hurdle on Thursday when the country’s Federal Court approved the $A143 million deal.

As a result of the approval, shares in Aurox will cease to be traded on the Australian Securities Exchange on Friday with shares in the merged entity set to be traded from Monday.

Under the merger deal, shareholders in Aurox will receive one Atlas share
for every three Aurox shares held, a deal that values Aurox at 74 cents a share, a 173 premium to Aurox’s share price prior to the deal being announced on 9 March 2010.

The merged entity will have up to 33 million tonnes per year of allocated port capacity in Western Australia’s Pilbara region.

Atlas commenced DSO mining at its Wodgina iron ore project in the Pilbara region
on 20 June. Atlas plans to export iron ore from Wodgina and its Pardoo project in the Pilbara at an annualised rate of 6 million tonnes by the end of the year and 12 million tonnes by 2012.

The company is also developing the Balla Balla project in the West Pilbara area with a mineral resource of 456 million tonnes and ore reserves of 238 million tonnes.

The company will also benefit from Aurox’s allocation of 6 million tonnes a year at the Utah Point berth at Port Hedland.

BHP, Rio Set Year-End Date For Iron Ore Deal

Year-End Deadline for Pilbara Merger

Iron ore giants BHP Billiton and Rio Tinto may re-evaluate plans to merge their Western Australian iron ore operations if the two parties cannot reach an agreement by year end.


The Wall Street Journal quotes BHP chief executive Marius Kloppers as saying the deal was being hampered by the proposed 40 per cent tax on mining profits proposed by the Australian government.


“The tax brings in uncertainty," Mr Kloppers told the paper. Earlier this week he told the Australian Broadcasting Corporation that both parties were keen to complete the joint venture despite the tax and despite opposition to the deal in the EU and China.


Mr Kloppers recently met his counterpart at Rio Tinto, Tom Albanese, and the two agreed on a 31 December deadline to complete the deal.


Mr Kloppers also said that BHP would invest elsewhere if the Australian government approved the deal.

BC Iron To Start Production Later This Year

Exports slated for December quarter

Australia’s BC Iron says it is on track to begin production at its Nullagine iron ore project in Western Australia's Pilbara region in the September quarter.


It expects to commence production at Nullagine in the third quarter of the 2010 calendar year with exports scheduled to begin in the December quarter.


The project is an equal joint venture with Fortescue Metals Group Ltd, which agreed in June 2009 to provide rail haulage, port handling and ship loading facilities to in exchange for half of the project.

Brockman Signs Iron Ore Deal With Sinosteel

Deal Could Be Worth $A6 Billion

Pilbara iron ore producer Brockman Resources has signed a sales deal with China's largest iron ore importer, Sinosteel, which could be worth more than $6 billion.

Brockman announced on Tuesday that it has signed a landmark memorandum of understanding with Sinosteel Australia, for the purchase of up to 50 per cent of future production from its Marillana iron ore project in Western Australia.

"This is a key milestone because you are now dealing with one of the most credible international companies when it comes to offtake and it shows credibility to us and our project," managing director Wayne Richards said.

"To get someone like Sinosteel willing to market 50 per cent of your ore is a major benefit." Mr Richards added that talks have been taking place for 18 months.

The agreement involves the purchase of up to 10 million tonnes a year of production over an initial five-year period.

Commenting on the deal Sinosteel Australia's managing director Li Ying said: "Our company is keen to co-operate and partner with Australian companies with credible projects seeking to leverage our capability to supply raw materials for China's steel industry, whether this is iron ore, manganese, chrome ore or coal."

Rio, BHP Pilbara Merger May Fail

Rio Shareholders May Demand Bigger Payment

Rio Tinto and BHP Billiton’s planned merger of their iron ore operations in Western Australia’s Pilbara region is likely to collapse unless Rio gets a bigger payment from its partner, a report by Royal Bank of Scotland Group Plc analyst Lyndon Fagan said on Monday.

BHP agreed last year to pay Rio $4.8 billion to equalise ownership of the venture. RBS calculates the payment is now worth $8 billion.

"Rio shareholders will not approve the deal, assuming it makes it through the European Union competition commission, unless a higher payment is negotiated from BHP," Mr Fagan said.

In the event that Rio asks BHP for a higher payment, BHP is likely to weigh up alternatives such as building an outer harbour at Port Headland in Western Australia, he added.

The two companies had planned to combine iron ore operations in Western Australia to save about $10 billion in costs.

Port Hedland Iron Ore Shipments Up 13.7 Per Cent

Exports To China Also Rise

The Port Hedland Port Authority in Western Australia's Pilbara region shipped 14.8 million tonnes of iron ore in March, up 13.7 per cent on the February total of 13.05 million tonnes, and up 13.5 per cent on March 2009, the authority said on Wednesday.

Exports to China, the world's biggest iron ore importer, rose 7 per cent to 9.33 million tonnes in March from February.

West Australia To Receive Higher Iron Ore Royalties

Concessions "Outdated" Says Premier

Western Australia’s Premier Colin Barnett says he expects iron ore miners BHP Billiton and Rio Tinto to begin making full royalty payments to the state from 1 July.

The two iron ore companies have been receiving a concession on royalties under a State Agreement signed in the 1960's.

Mr Barnett told ABC that this agreement is out-dated and that BHP and Rio should be paying about $300 million more each year.

"The concessions that apply under the state agreements acts have run their course. I believe BHP and Rio should be paying the same royalties as any other miner pays under the mining act.

"BHP and Rio fully understand that."

Australian Regulator Delays BHP-RIo Pilbara Ruling

Adjudication Delayed To 27 May

Australia's competition watchdog has pushed back the date for its ruling on the planned iron ore joint venture between BHP Billiton Ltd.and Rio Tinto Ltd to 27 May.

The Australian Competition and Consumer Commission said it is waiting on more information from the miners on the plans to merge their operations in Western Australia’s Pilbara region.

The two companies plan to combine mines, railroad, ports and workforces in Western Australia’s Pilbara region in a 50-50 joint venture to save at least $10 billion. The deal will mean that two-thirds of global iron ore supply will be in the hands of two production groups and is being opposed by steelmakers in Europe and Asia. The ACCC has already taken a tougher than expected line in its response to the deal. Australian steel manufacturer, Bluescope Steel, has already raised concerns about the deal.

This is the second time the Commission has delayed its ruling. It had originally planned to announce its findings on 24 February but this was delayed to 28 April. This latest delay is "to allow time for BHP Billiton and Rio Tinto to respond to the ACCC's information request of 30 March 2010, and for the ACCC to consider the JV parties' responses".

German regulators are already investigating the planned merger and is now expected to report by the end of July.

Gindalbie Looking At 30 Million Tonnes A Year By 2020

Karara Mine To Commence Output In 2011

The managing director of Gindalbie Metals Ltd has told Reuters that he expects his company to triple iron ore production to around 30 million tonnes a year by 2020 from mining operations expected to start next year.

"We've got a plan to start producing in 2011 and by 2020 we will complete our ramp up to 30 million tonnes per annum," Garret Dixon said in an interview on Thursday. "We're starting at 10 million tonnes next year and will progressively increase after that," he added.

Production at the company’s Karara mine will be shipped to Chinese steelmaker Ansteel commencing next year from the port of Geraldton, 250 miles north of Perth in Western Australia. The two companies signed an agreement this week that could deliver nearly 900 million tonnes of iron ore over three decades once the Karara operation in Western Australia’s Mid West iron belt is running at full capacity in full swing.

Gindablie estimates that eight million tonnes of high-grade concentrate and two million tonnes of direct shipping ore will be produced at Karara in 2011.

A second larger port, proposed in nearby Oakajee, is needed to allow the company to maximise its production.

Losses Narrow At Atlas Iron

Australian iron ore junior, Atlas Iron, narrowed its first half loss in the six-months to December after a sharp rise revenue.
Net loss for the six months to December 31 was $24.4 million, down from $42.2 million for the same period in 2008 while revenue leapt to $41.7 million, from $3.5 million previously.

Mine development costs for the first half were $38.9 million, up from $25.4 million in the previous year.
Atlas shipped 1.08 million tonnes of iron ore from its Pardoo mine in Western Australia's Pilbara region, to steel makers in China between December 2008 when production commenced and December 2009. The company expects to increase production to 2.4 million tonnes per year by the middle of 2010.

Atlas has also commenced construction at its Wodgina mine in the Pilbara. Production is expected to commence in April or May of this year.

Atlas’s shares were suspended on Tuesday pending a price-sensitive announcement. It was reported earlier in the week that India’s NMDC was leading a bid to take a stake of up to 70 per cent in the Pardoo project.

West Australia Identifies Deepwater Iron Ore Port

Western Australia, producer of 70 percent of the country’s exports to China, has identified a new deepwater port that may be used for iron ore exports from the Pilbara region.

The port is at Anketell, 30 kilometres (19 miles) east of Karratha and the government says it could be used by Fortescue Metals Group Ltd., China Metallurgical Group Corp. and API Management Pty Ltd.

Operations at the Anketell port may start by 2015, Western Australian Premier Colin Barnett said. Mr Barnett suggested that Fortescue’s Solomon mine, China Metallurgical’s Cape Lambert project and API’s West Pilbara Iron Ore mine could become “foundation investors” in the port.

Rio Tinto's Pilbara Iron Ore Project Starts Production

Rio Tinto Ltd's billion-dollar Mesa A/Warramboo mine in Western Australia has begun producing iron ore more than two years after construction began on the project. Rio has a 53 per cent stake in the mine.

Initial production of 20 million tonnes per annum will increase to 25 million tonnes by 2011, the company said. The deposit is estimated to have high-grade reserves of 249 million tonnes, with a mine life of 11 years.

Profits Fall At Fortescue Metals

Underlying first half profit at Australian iron ore producer, Fortescue Metals Group, fell in the first half of the year to $98 million, down from US$164 million in the previous corresponding period. Figures were affected by the revaluation of the Leucadia loan note, which resulted in a negative adjustment of US$55 million against a boost of US$1.4 billion in the previous year, however the fall was also due to lower average realised prices during the half, which fell to US$57.22 per dry metric ton from US$71.65 in the previous comparable period.

Revenue for the half year rose 17% on year to US$1.19 billion from a restated US$1.01 billion a year earlier. Earnings before interest, tax, depreciation and amortization were US$426 million for the half year ended Dec. 31, down from US$479 million a year earlier. The company isn't paying an interim dividend.

Fortescue also announced that it has pushed back expansion plans for its port and iron ore operations in the Pilbara region of Western Australia although it said that the date could be brought forward again if it sought external funding. The company had aimed for an annualised rate of 95 million tons a year from February 2012; it now aims for 92 million tons a year from April 2013.

Hazelwood Resources Starts Pilot Tests At Big Hill Tungsten Deposit

Australian tungsten producer Hazelwood Resources has started pilot milling tests on bulk samples from the Big Hill Tungsten Deposit in Western Australia’s Pilbara region.

Approximately 30 tonnes of excavated material and 40 tonnes of large diameter metallurgical core have been collected to provide feed for pilot scale processing test work for the definitive feasibility study.

Hazelwood is focused on becoming Australia’s only Tungsten producer with 2-3% of world production commencing in 2010.

The company’s iron ore and nickel projects are located in the same Cookes Creek region in the eastern Pilbara and offer significant potential for the delineation of resources in the near future.

West Australia Demands Higher Royalties From Iron Ore Miners

West Australian Premier Colin Barnett wants iron ore miners BHP Billiton and Rio Tinto to start paying increased royalties from 1 July. The scrapping of a historic concessional royalty regime was a condition for the state to allow the two to merge their mining interests in the Pilbara region of the state. The merger was due to take effect from the first-half of this year, however this looks to have been deferred and no date has been set. Despite that Mr Barnett is insisting on an increased royalty rate from 1 July.

"What I have said to BHP and Rio is if you want the state to put effort into facilitating this, the first thing, the condition for a start, is to pay full royalties. That is the fire of the starting gun (and) the 1st of July is the date we have nominated." The miners currently pay a concessional royalty of 3.75 per cent of revenue for most of their iron ore fines production however the fines rate paid on newer operations approved under the current Mining Act is as much as 5.625 per cent.
The miners have yet to respond to Mr Barnett’s demand.

UMC Reveals Pilbara Iron Ore Zone

Pilbara iron ore developer United Minerals Corporation has revealed new assay results show a 162m thick high grade zone of bedded mineralisation at the Railway Iron Ore Deposit.

Australian iron ore company, United Minerals Corporation continues to advance development of its Railway Deposit located in the Pilbara region of Western Australia with assay results from the recent reverse circulation drilling program at Boundary Zone within the southeastern segment of the deposit continuing to confirm a significant thickening of bedded mineralization.

Highlights:
1. New assay results show 162m thick high-grade zone within southeastern portion of Railway Deposit at Boundary Zone
2. New data further confirms a significant thickening of bedded mineralization in the south-eastern section of the Railway deposit
3. UMC supports State Government in negotiating infrastructure access for all Juniors in the Pilbara.

The new data are from five RC holes drilled at 40m spacing along section 674275 mE. The holes are situated on a drill line 100m east from section 674175 mE and were reported previously based on visual inspections of iron mineralization.

Mr Matthew Hogan CEO of United Minerals said that “These results reaffirm the outstanding commercial potential of the Railway Deposit. We support the State Government in its negotiations for infrastructure access on behalf of all Juniors in the Pilbara to unlock the revenues and jobs that come from bringing exciting projects such as this on line.”

Rio Tinto Delays Pilbara Train Project

Rio Tinto Group, the world’s third-largest mining company, is to delay work on a $371 million program to automate trains at its Pilbara iron ore operations in Western Australia because of the global economic slowdown.

“The easing of market growth caused by the economic slowdown has reduced the urgency of this project,” the London-based company said today in an emailed statement.

Source: Bloomberg