3:00AM New York, 7:00PM Sydney –Fortescue and Rio Tinto compete to develop Pilbara region mines as world demand for iron ore remains high.
Market Sentiments
ASX 200 index gained 0.4% or 20.5 to close at 5,443.20. The preliminary market turnover was 1.99 billion, worth $7.03 billion, with 557 stocks up, 683 stocks down and 377 unchanged. The most traded stock was Telstra with 63.2 million shares worth $287 million.
Market Driver
Fortescue Metals Group Ltd has entered into an agreement with Cazaly Resources Ltd to develop Rhodes Ridge Project in the Pilbara region of Western Australia.
Fortescues said in a statement, Cazaly had applied for exploration and prospecting licenses within the Rhodes Ridge Project boundaries and will provide marketing support if Cazaly succeed in gaining exploration and development rights.
Under the terms of the agreement, Fortescue would pay Cazaly an advance on future royalties calculated at $0.05 per ton of any inferred JORC compliant resource contained in the Rhodes Ridge Project with an agreed minimum payment of $20 million and an agreed maximum of $100 million.
In addition, upon the commencement of mining, Fortescue would pay Cazaly a royalty of $1 per ton for the first billion tons ore of shipped or $0.75 per ton for any further ore shipped capped at 1.65 billion tons providing the royalty does not exceed $50 million or 2% annual revenue.
The agreement however hinges on the issuance of a ministerial consent and grant of tenement rights to Cazaly and subsequent transfer of these rights to Fortescue.
The Rhodes Ridge Project is situated in the Pilbara region of Western Australia, approximately 40 km northwest of the Newman town on the south-eastern edge of the Hamersley Iron Province.
The Great Northern Highway passes through the Rhodes Ridge Project. The land the subject of the Rhodes Ridge Project is recognised as containing one of the largest undeveloped iron ore deposits in Western Australia.
Fortescue''s share rose 5% and Rio was up 2.3%.
Gainers and losers
Of the ASX 200 index stocks, Babcock & Brown led the gainers with a rise of 16% followed by increases in Babcock & Brown of 12.3%, in Flight Centre of 6.5%, in AED Oil Ltd of 6.5% and in Challenger Finance of 6.5%.
Of the ASX 200 index stocks, Allco Finance Group led the decliners with a fall of 19.4% followed by losses in Perilya Ltd of 8.5%, in Centennial Coal of 7.8%, in Timbercorp Ltd of 7.7% and in St Barbara Ltd of 6%.
Rio approves US$667 million for infrastructure and studies for mine expansions
Rio Tinto today announced that it has approved the funding of US$667 million (Rio Tinto share US$492 million) in infrastructure and studies for mine expansions as part of its drive to increase the annual capacity of its Pilbara operations to 320 million ton by 2012.
Of the package, US$518 million (Rio Tinto share US$343 million) will fund the early commencement of infrastructure works and acquisition of long-lead items such as heavy mobile equipment - key components of this expansion.
The balance of US$149 million is directed to a study of a new iron ore mine on the Western Turner Syncline, near Tom Price, following successful completion of the pre-feasibility assessment. The proposed mine would eventually ramp up to 29 Mtpa capacity, feeding into existing Tom Price processing plant, with production scheduled to commence in Q4 2010. |
