August 7th (The Sydney Morning Herald) – Atlas Iron Ltd has entered into a joint-venture agreement with Fortescue Metals Group Ltd (FMG) for Atlas’s Abydos project in Western Australia’s Pilbara region.

The joint venture covers a tenement over which Atlas owns the iron ore rights. Atlas also said that it was the first company to seal a port access deal with Fortescue for its new Port Hedland iron ore export terminal. “The primary focus of the joint venture is to define and develop extensions to the FMG Glacial Valley magnetite deposit, (part of the Abydos project)” Atlas said in a statement.

“FMG may earn a 60 per cent joint-venture interest in the iron ore rights by delineating inferred resources of iron ore within the tenement,” Atlas said. It also said FMG may earn a further 15 per cent joint venture interest in the iron ore rights by completing a pre-feasibility study on the mining of iron ore within the tenement.

A further 12.5 per cent joint venture interest may be earned in the iron ore rights by completing a definitive feasibility study on the mining of iron ore within the tenement. Atlas has converted a memorandum of understanding (MOU) into a binding heads of agreement to use Fortescue’s port facilities for the initial period of production from its flagship Pardoo project, about 100km from Port Hedland.

Pardoo commences production in October, with exports to follow in December.

“This is a ground-breaking third-party port access agreement, the first of its kind in Western Australia,” Atlas managing director David Flanagan said. “We now look forward to building on our association with FMG as we commence development of our second iron ore project, 120km south of Port Hedland at Abydos.”

Atlas is expected to negotiate a rail haulage agreement with FMG to transport ore from Abydos to port. It is also likely to use road haulage to get its product from Pardoo to port. Mr Flanagan flew from the Diggers and Dealers Conference in the mining town of Kalgoorlie to Perth to finalise the negotiations. He returned to the popular conference to make a presentation.

He told delegates that Atlas had not yet committed to offtake agreements because it planned to sell about 60 per cent of product on the spot market to capitalise on high prices. “Every other day we receive an offer … with a base case that we would achieve a premium to the benchmark price,” he said.

He said Atlas was spending between $1.2 million and $1.5 million on exploration each week. The only other company that has an MOU with Fortescue is BC Iron Ltd.

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August 1st (ABC News) – A fully loaded iron ore carrier has run aground at Port Hedland. The Iron King carrier is understood to be leased by the Fortescue Metals Group and was carrying 160,000 tonnes of iron ore when the incident happened last night.

The Executive Director of Operations at Fortescue Metals, Graeme Rowley says the carrier had been loaded and was leaving the Port when it appeared to lose steering. “It has gone and hit the edge of the channel and is stuck waiting for the next high tide,” Mr Rowley said.

The carrier was travelling about seven knots at the time and was on its way to China. Mr Rowley says no-one was injured and at this stage there are no reports of any hydrocarbon leaks. He says divers are on their way and will inspect the ship for damage after it has been refloated. The Port Authority will attempt to refloat the carrier at the next high tide. The stricken vessel is blocking two other carriers which were trying to enter the harbour to load.

July 30th (ABC News) – The Fortescue Metals Group, headed by Andrew Forrest, is making its first foray into international mining by applying to test for minerals in a vast area in New Zealand.

Fortescue Metals Group (FMG) has made several applications to test for iron ore sands on the west coast of the South Island in an area covering 4,000 kilometres.

The venture has upset a group of miners who claim their century old gold mining business could be jeopardised.

Bluescope Steel is already dredging iron ore sands along the North Island.

It is understood other miners including Rio Tinto and China’s Sinosteel also have interests in the region.

FMG’s Graeme Rowley says if its applications for permits are approved it will consult with concerned groups.

“At this stage it is so early in the process that we are not aware of some of the challenges that obviously through the consultation we will be involved in all of the issues that are raised by local community,” he said.

“Obviously through the consultation we will be involved in all of the issues that are raised by local community and obviously if certain things become prohibitive then obviously the tenders will not be granted.

 

Too large

 

Keith Brodie from New Zealand’s mining lobby Minerals West says FMG’s application is too large and the governing body needs to scrutinise it closely.

“[To] make sure it complies with the minerals program that covers the whole of New Zealand,” he said.

“Also to make sure that they’re not sacrificing one part of the minerals industry for another so it has to be carefully considered.”

July 30th (The West Australian) – Fortescue Metals Group has shipped $310 million worth of iron ore to China in the past 11 weeks, after making the move from iron ore aspirant to producer, the company has announced.

The start of production had helped bring FMG’s cash on hand to $192.2 million by the end of the June quarter, the firm said in its quarterly announcement.

The company had loaded 4 million tonnes of ore from its mine in WA’s Pilbara region from the start of production to July 29.

FMG had set its benchmark price at $US2.0169 per iron unit of lump and $US1.4466 per iron unit of fine ore – a respective increase of 95 per cent and 78 per cent over the previous year.

The firm had increased its tenement area by over 17,000sqkm during the quarter, taking its total area to about 57,400sqkm – of which 44,400sqkm is in WA.

At 10.30am, FMG shares were trading at $8.24, up 29¢ or 3.6 per cent.

July 21st (ABC News) – A mining analyst says Fortescue Metals Group (FMG) should be able to obtain finance for its expansion plans despite the downturn in the markets.

FMG is planning to triple the size of its Pilbara mining operations.

Alex Passmore from Patersons Securities says that could cost it up to $5 billion, but FMG’s strong cash flows, now that exports of iron ore to China are underway, put the company in a good position.

“With the liquidity of the project significantly increased following this milestone, and strong cash flows given the high iron ore prices, and relatively low cash costs that Fortescue show, the financing is certainly achievable,” he said.

“The project can certainly support large scale expansions from here.

“The resource base and the reserve base can support expansions, potentially up to 200 million tonnes, but financing and the final tonnage number is yet to be decided by the board of FMG.”

 

Forrest confident

 

The head of FMG, Andrew Forrest, is also confident about obtaining the funding.

Mr Forrest says there are a number of options available.

“Even with the credit markets having sunk the way they have, there’s an enormous amount of liquidity in the system but it’s chasing very few, very good projects,” he said.

“Now, Fortescue is one of those very few, very good projects.”

July 20th (Business Spectator) – Fortescue Metals Group Ltd says it can now expand and further develop growth projects throughout West Australia’s Chichester Ranges, after achieving “Project Completion”.

The milestone required the resource firm to mine, rail and ship two million tonnes of iron ore within a four week period, which has been verified by Behre Dolbear Australia, the project’s independent engineer.

It means Fortescue has now satisfied certain conditions within its financial arrangements, allowing it to pursue expansion and development plans for the Chichester Ranges.

It comes eight weeks after the company shipped its first load of iron ore to Chinese steel major Baosteel.

“This sets a great platform for the continuing ramp up of our project to its initial targeted capacity of 55 million tonnes,” Fortescue chief executive Andrew Forrest said.

Mr Forrest said it marked another step towards the company’s goal to become a major mining player.

July 3rd (Business Spectator) – Fortescue Metals Group Ltd has not confirmed whether it is considering a spin-off of its iron ore assets to meet its expansion targets, according to the Australian Financial Review newspaper.

The paper reported the group’s planned iron ore expansion was being restricted in terms of pace and scale due to the restrictive terms of its $2.7 billion bond raising, which was struck in August 2006.

“We have an enormously strong market, we have demonstrated our ability to construct a project and to get it up in record time at the cheapest going capital dollars and we’re determined to stay in there with the market as strong as it is,” said executive director Graeme Rowley.

“Therefore, in the interests of our shareholders, we have to be examining all the potential options that relate to expansion and as soon as we’ve settled on one, on the circumstances that are appropriate at that time, we’ll obviously make an announcement,” said Mr Rowley.