parker range alliance and deal worth $180m+, page-32

With a shortage of good news today on the stockmarkets, I hope this article will help to lift the spirits of all Cazaly holders.

Good luck to all

R.

$180m project sale puts resources company Cazaly in clover

* Sarah-Jane Tasker
* From: The Australian
* August 05, 2011 12:00AM



Iron ore

Cazaly Resources has offloaded its Parker Range iron ore project in Western Australia in a move described by the company's management as a 'tremendous achievement' Source: The Australian

CAZALY Resources has sold its West Australian Parker Range iron ore project for up to $180 million to an undisclosed Southeast Asian investment group.

Cazaly managing director Nathan McMahon said the sale was a "tremendous achievement" for the company.

"The deal makes corporate sense for us and the party that we dealt with has the financial wealth and technical ability to build the mine on time," he said.

"We will then still work with them in an alliance and will manage the exploration, so we have upside exposure there. It is a mixture of complementary skills bases and financial resources."

The deal includes $100m cash plus royalties when the project is brought into production.

News of the deal sent the junior's shares higher yesterday.

Cazaly's attempts to progress the project had been frustrated by its lack of port availability, with its access to Kwinana ruled out and a preferred option of Fremantle, for stage one of the project, unlikely to gain state government support.

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The company, which was targeting 1.4 million tonnes per annum in the first stage of production from the first quarter next year, was hoping to export iron ore from either the Kwinana or Fremantle ports before the emerging miner could access the Esperance port in 2013.

Mr McMahon said the issue of port access did not drive the deal but it would now be up to the Asian group to find an interim solution before it could send ore through Esperance.

"We want to see the project in production as soon as possible and they have the balance-sheet strength to be able to do that," he said. "We will be working with them closely. . . to get the port allocation and get it into production as soon as possible."

Mr McMahon said he was hopeful a short-term port solution could be sought.

The agreement with the Asian party for Parker Range allows for the payment of an initial $40m in six months of the execution of a formal sale and purchase agreement, and a further payment of $55m on either the export of iron ore or 24 months from signing the formal agreement, depending on what milestone is reached first.

Cazaly has also secured a royalty of $2.50 per tonne on all ore produced.

Mr McMahon said he would not disclose who the purchaser was for now but he said it was a "major" investment group.