Clive gets a mention in this (for the usual wrong reasons.....) as do magnetite projects in general.
North Star is FMG's magnetite asset (similar sized deposit to ARH).....no doubt Twiggy has a few more options up his sleeve given cashflow from existing producing mines (much like Grange).
*********************************************************** AFR - Tuesday 17th Jan by Jamie Freed
FMG Seek Magnetite Partner
Fortescue Metals Group is considering partnerships with third parties to develop its North Star magnetite project in an effort to help monetise the huge resource without burdening its own balance sheet. Fortescue yesterday unveiled a 72% increase in the Pilbara project’s resource to 2.12 billion tonnes and said a feasibility study on the project should be completed by the end of March.
The North Star project, which has an average grade of 31.6% iron is similar in size and grade to the USD 6b Sino Iron project being developed by CITIC Pacific. Fortescue said North Star could produce between 20-30 million tonnes of iron ore annually for a 20 year period. In addition to North Star, Fortescue also owns a 65% stake in the adjacent Glacier Valley project in a JV with a Chinese steelmaker Baosteel.
Combined the 3.2b tonnes of resources at North Star and Glacier Valley make for one of the 10 largest magnetite deposits in the world. In December, Fortescue signed a land access agreement with the Njamal people covering North Star, creating a JV between the miner and the native title holders to run a mining operation in return for certainty of tenure over the ground. Fortescue yesterday said any development of North Star, which is located 100 kilometres south of Port Headland and within 25kms of its existing railway line, would be non recourse to its own balance sheet.
Fortescue raised an additional USD 1.5b of debt in October to help fund a USD 8.4b hematite expansion project due to be completed in mid 2013. The iron ore miner, which is expected to report strong December quarter production figures today, last year publicly raised the possibility of floating some of its magnetite assets in Hong Kong. However, soon afterward, Clive Palmer failed in an attempt at a USD 3.6b float of Resourcehouse, which contained a similar magnetite project and a coal project in Queensland. Fortescue has not said whether it has appointed an investment bank to advise on a JV covering North Star but JP Morgan has investigated similar deals for the company previously.
Most analysts do not attribute any value to Frotescue’s magnetite resources in their stock assessments, meaning any proceeds from potential sale would be viewed positively. The Baosteel JV was first struck in 2007 and a resource estimate for the Glacier Valley deposit was released in 2009, but Fortescue has said very little about the progress since. Magnetite projects in Australia have had a chequered history. Projects like Sino Iron and Gindalbie Metals Karara JV with Ansteel have been hit by delays and cost blowouts.
ARH Price at posting:
18.5¢ Sentiment: Hold Disclosure: Held
