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.

Gindalbie To Raise $200m For Karara Project

Australian iron ore miner Gindalbie Metals Ltd is seeking up to $206 million to help fund the development of its $2 billion Karara iron ore project in Western Australia.

The capital raising will include a $111.8 million share placement to institutions and another placement with its joint venture partner and largest shareholder, China's Angang Steel Company Ltd (AnSteel), to raise between $63.2 million and $74.6 million.

Last month Gindalbie secured last month a $US1.2 billion ($A1.34 billion) loan facility with funds sourced mainly from China Development Bank and Bank of China.
Gindalbie said at the time that it had about $200 million in cash reserves remaining from equity payments totalling $534 million that have been contributed by Gindalbie and AnSteel to the joint venture company.

Mining is expected to begin in mid-2011.

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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.

Atlas Iron Receives Approval For Wodgina

Mining Expected to Commence in June

Australian iron ore junior, Atlas Iron, has secured government approval for its Wodgina iron ore project in Western Australia.

With all environmental approvals complete, Atlas expects to move its mining fleet to the site with mining expected to commence in June this year.

"To take a project from an iron ore discovery to an iron ore mine in less than 18 months is simply remarkable," managing director David Flanagan said in a statement on Friday.

"We are now well positioned to benefit from very strong demand, high iron ore prices moving forward, and to meet our target export rate of six Mtpa by December 2010."

The Wodgina project will start at a production rate of two-million tons a year, with the initial mining from the Anson deposit. The mine is expected to produce a quality, low-alumina fines only product, which would be trucked to the nearby Port Hedland for export.

The company has also commenced drilling at its Wodgina North iron ore prospect which has an exploration target of between 20 million and 40 million tons at 57 per cent to 60 per cent iron.

"In the event that drilling is successful, Atlas will move to fast rack feasibility studies targeting a production expansion of Wodgina during late calendar year 2011," it said.

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.

Queensland Rail To Transport Karara Iron Ore

Ten Year Deal To Freight Ore To Geraldton

Queensland Rail is to transport iron ore from Western Australian miner Gindalbie Metals's $1.8 billion Karara project to Geraldton port.

The rail operator, which moved into Western Australia in 2006, will announce on Monday that it has signed a heads of agreement with Gindalbie for a 10-year deal for 8 million tonnes of concentrate and 3 million tonnes a year of direct shipping ore with an option to take the whole of the 30 million tonnes a year that Gindalbie expects to produce at Karara.

The Karara project is a joint venture between Gindalbie and the Chinese steelmakers Ansteel. The first iron ore is expected to be produced next year.

"This is potentially one of the largest individual long-term contracts which will be awarded for the Karara Project, with a value of several hundreds of million dollars over the initial 10-year period," Gindalbie managing director Garret Dixon said.

Queensland Rail is expected to be privatised later this year.

Zinc Mining Could Return To Lennard Shelf

Indian Firm Takes Stake In Meridian Minerals

Zinc mining could return to the Lennard Shelf at Kimberley in Western Australia after local miner Meridian Minerals received financial backing from an Indian company.

Binani Zinc will take a $2 million stake in Meridian as well as providing it with a €6 million loan. The funds will be used to buy the Galmoy zinc-lead processing plant in Ireland and to complete a feasibility study on the Lennard Shelf site.

Gindalbie Signs Karara Loan Deal With Chinese Banks

China To Provide $1.2 Billion Loan

China Development Bank Corp. and Bank of China Ltd., have agreed to provide most of a $1.2 billion loan to Gindalbie Metals Ltd. to develop its Karara iron ore mine in Western Australia.

Gindalbie, which is developing the mine in a joint-venture with China’s Anshan Iron and Steel Group (Ansteel), said on Friday that it has signed a mandate letter with the banks for a 12-year loan facility. Conditions will be finalised by 30 June. The project loan facility will be secured against the Karara project and the shareholders’ shares in the joint venture project vehicle, Karara Mining Limited.

Last month Gindalbie and Anshan signed an agreement estimated to be worth $65 billion for the Chinese steelmaker to buy the whole of Karara’s output over the life of the mine. The mine is expected to begin production next year with output estimated at 30 million tonnes a year.

Gindalbie Managing Director Garret Dixon said in a statement that the loan is based on the US six-month London Inter-Bank Offer Rate (LIBOR) without giving details of the margin.

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.

Golden State Resources Sells Johnson Range Interest

Cliffs Natural Resources Snaps Up Australian Iron Ore Resource

Australian miner Golden State Resources has sold its interest in the Johnson Range iron ore project to a subsidiary of Cleveland-based Cliffs Natural Resources. The deal is said to be worth A$3 million.

Under the agreement Golden State will receive a gross royalty of 2% on iron ore sales from Johnson Range coupled with a 2% gross royalty on the sale of all other minerals transported from the project.

The project is located in the Yilgarn region of Western Australia, around 400km (250 miles) east of Perth.

New Fortescue Iron Ore Project To Cost $9 Billion

Australian iron ore miner, Fortescue Metals Group has delivered an upbeat assessment on the current iron ore market. In a presentation to investors in New York, CEO Andrew Forrest said he sees prices strengthening as China's ability to meet its own iron ore requirements declining fast.

Fortescue also gave an update on its operations in Western Australia where production is currently running at 40 million tonnes a year. The company is aiming to increase this to 55 million tonnes within the next 12 months.

The company’s feasibility study for its 60 million tonne a year Solomon operation is nearing completion. Capital expenditure on the project was likely to total $8.9 billion with $3.2 billion on the first stage and with a second stage to add an extra 100 million tonnes a year costing about $5.7bn.

Fortescue also indicated it envisaged a third rail hub linking the company's planned magnetite mining operations to the new Anketell Point port south-west of Port Hedland in WA.

Fortescue and Aquila Resources Ltd are driving plans for the new port, a short distance from Rio Tinto Ltd's major export port at Dampier.

The West Australian government gave the proposal the green light last week and has offered to contribute $3.5 million to its construction, which is expected to cost several billion dollars.