0 COMMENTS Large-scale export facilities such as this terminal in Port Hedland are considered crucial to Western Australia's Mid West region's potential as a magnetite export hub. Photo: Reuters
Western Australia’s stalled Oakajee Port – a piece of infrastructure considered to be key to unlocking the state’s magnetite-rich Mid West region – could have been given a lifeline, with a $100 million investment in ASX-listed AustSino Resources potentially breathing new life into the proposal.
AustSino announced to the ASX that privately held Chinese firm Western Australia Port Rail Construction (Shanghai) Ltd, led by Qiu Yu Hu and Li Ping, would pour $100 million into the company via a placement priced at 1.3 cents per share.
Mr Li and Mr Qiu are Shanghai-based investors, primarily involved in the technology and property sectors, who had previously invested $3 million in AustSino through WAPRC.
Following the placement, WAPRC will hold a 61 per cent stake in
port, while the majority of the funds, around $58 million, would be used to acquire a controlling stake in Africa-focused iron ore play Sundance Resources.
Development of a port at Oakajee, located around 25 kilometres north of Chinese tourist hotspot Geraldton, has been dogged by a litany of delays and false starts.
Its original proponent, Murchison Metals, was forced to sell its stake in the port and rail infrastructure and Jack Hills iron ore deposit to its joint venture partner, Japan’s Mitsubishi Corporation in late 2011.
Mitsubishi placed the $9.7 billion mine, port and rail project on indefinite hold in 2013, citing poor economic conditions which included
Chinese groups operating in the region include Sinosteel, which is recommissioning the Blue Hills hematite mine and holds magnetite-rich tenements at nearby Koolanooka, and Ansteel, which holds a controlling stake in the producing Karara magnetite project.
The Mid West’s potential as a magnetite province has been boosted in recent years due to structural changes in China’s steelmaking sector, with beneficiated magnetite concentrate helping steel producers meet stricter emissions control requirements as the Chinese government seeks to curb pollution in its biggest steelmaking centres.
Meanwhile, the Sundance transaction, priced at 0.4 cents per share, will result in the cancellation of Sundance’s existing convertible notes, with $8 million to be retained for working capital to progress the Mbalam-
Nabeba iron ore project in Cameroon.
Sundance Resources chief executive Giulio Casello said the deal was a transformational transaction, with AustSino well-placed to advance the development of the mine.
“AustSino has made it clear its intent to see Mbalam-Nabeba developed and together we will soon be travelling to Cameroon and Congo to demonstrate how they can develop the project,” Mr Casello said.
Sundance is planning to develop a 40 million tonne per annum direct shipping ore operation at the first stage of Mbalam-Nabeba, with a second stage in the pre-feasibility stage.
ANS Price at posting:
1.7¢ Sentiment: Buy Disclosure: Held
