Murchison still courting China to fund ore project

PUBLISHED : Friday, 25 November, 2011, 12:00am
UPDATED : Friday, 25 November, 2011, 12:00am
 

Despite signing a tentative A$325 million (HK$2.47 billion) deal with Japan's Mitsubishi Corp, Murchison Metals is still courting Chinese companies to invest in a A$10 billion mining and infrastructure project in Western Australia, which might supplant the deal with Mitsubishi.

'There is an opportunity for Chinese companies to do a deal with us,' a source close to the Australian-listed mining firm told the South China Morning Post.

Mitsubishi has agreed to buy Murchison's 50 per cent stake in the Oakajee Port and Rail project as well as the Jack Hills iron ore mine for A$325 million. If the deal goes through, the Japanese conglomerate would own 100 per cent of the iron ore mine and the port and rail project, whose capital costs total A$10 billion.

Under the terms of the agreement, Murchison is free to seek alternative investment proposals until its shareholders vote on the Mitsubishi deal on February 15 next year.

At the annual general meeting in Perth, Western Australia, yesterday, Murchison managing director Greg Martin said several Chinese firms had visited Murchison's data room to gain access to confidential company information on the mining, port and rail project in the past few months.

'It's time for other parties to decide what they think of that [Mitsubishi deal] and come forward with superior proposals,' Martin told shareholders.

Murchison chairman Ken Scott-Mackenzie said sovereign wealth fund China Investment Corp was conducting a feasibility study on the proposed A$6 billion Oakajee Port and Rail project on behalf of China's National Development and Reform Commission.

The iron ore mine and the port and rail project are expected to be operational by 2016. Delays prompted Chinese steelmaker Sinosteel to suspend a A$2 billion iron ore project in Western Australia in June. Sinosteel, which owns 6 per cent of Murchison, is one of the key customers for the Oakajee Port and Rail project.

52.7%

The surge in Murchison Metals shares yesterday to close at 42 Australian cents

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