Chinese steel mill to inject A$40m into Centrex project

29 September 2007 | 04:21 Code : 15431 Geoscience events
Top 10 China steel mill, Baotou Iron and Steel (Group) Co Ltd has signed an....
Chinese steel mill to inject A$40m into Centrex project

  Top 10 China steel mill, Baotou Iron and Steel (Group) Co Ltd has signed an agreement to inject up to A$40m to take a South Australian iron ore project, owned by Centrex Metals, through to completion of a bankable feasibility study.Under the Heads of Agreement with Centrex, Baotou will earn, through a new joint venture, a half share in the Bungalow magnetite deposit near Cowell on South Australia’s Eyre Peninsula.Baotou already has a 10.13 percent stake in Centrex and has agreed to take one million tonnes of hematite ore for five years from Centrex’s neighbouring Wilgerup iron ore project due for production start-up next year.The China steel group’s Bungalow joint venture will result in it injecting A$8m into Centrex over the next 12 months.The agreement will entitle Baotou to 50 percent of Bungalow’s expected total annual production of three million tonnes of magnetite concentrate.Centrex’s Chairman, David Lindh, said the agreement represented a considerable step-up in the scale and momentum behind the company’s rapidly emerging Australian iron ore project.“The Centrex projects are moving ahead through a clearly transparent, close working relationship with Chinese interests,” Mr Lindh said. “This is delivering Centrex a vertically integrated partnership with the world’s hungriest iron ore market.”“China is now clearly behind Centrex as a cornerstone investor, a supporter of early exploration and development initiatives, feasibility study commitments, likely mine development options and product sale,” Mr Lindh said.Centrex’s Managing Director, Gerard Anderson said the joint ventures proposed work program would be conducted over three stages.“Stage 1 work is expected to commence early in 2008, subject to relevant Chinese consents and approvals for Baotou’s commitments,” Mr Anderson said.“It is also anticipated that the detailed farm-in agreements, joint venture agreements and management agreements will be finalised and available for execution by the parties in early 2008,” he said.

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