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.

August 4th (Mineweb) – The North West Iron Ore Alliance has further outlined its case for the establishment of third party infrastructure access in the Pilbara, today announcing it has submitted responses to the recent draft recommendations from both the Pilbara Rail Access Interdepartmental Committee (PRAIC) and the National Competition Council (NCC).

The Alliance announced today (Monday) that it intended to play an active role in shaping the framework for a third party access regime by participating in the PRAIC and NCC consultation processes, and remained strongly committed to working towards a constructive solution with other stakeholders in the Pilbara. 

Independent Chair of the North West Alliance, Ms Megan Anwyl, said access to existing infrastructure remained a fundamental necessity to the formation of a sustainable, viable and successful junior iron ore industry in the Pilbara.

“We believe that BHP Billiton and Rio Tinto have a legal obligation to allow rail haulage to third parties under their various State Agreements, and that this would lead to a healthy diversification of the iron ore industry in the Pilbara and better social and economic outcomes for its residents and the nation as a whole,” she said. 

“If fair and equitable infrastructure access is not granted, some mine sites would not be financially viable, or production could be severely limited due to the environmental, social, financial and potential licensing restrictions relative to the trucking of iron ore,” Ms Anwyl continued.  “Further, the State Government has a clear policy preference towards rail over road transport.”

“The four members of the North West Iron Ore Alliance – Atlas Iron, BC Iron, Brockman Resources and Ferraus – therefore have an obligation to their shareholders to negotiate a workable solution for the transportation and shipment of their ore through the Pilbara,” she commented.  “We have been very encouraged by the draft PRAIC regime and NCC recommendation, and look forward to providing further input towards the final outcomes through the responses we have submitted.” 

Ms Anwyl said one of the key PRAIC recommendations the Alliance had made was to support the need for the appointment of a strong Regulator to ensure a timely, effective and equitable access regime.

“It is important that the interests of all parties are balanced, and that there is an independent body to ensure that this balance is maintained,” she said.  “The North West Iron Ore Alliance therefore supports the need for a strong Regulator who would be responsible not only for approving such factors as the pricing and costing of the rail haulage regime, as but also for key issues such as capacity and service level principles, safety principles and capacity modelling principles.” 

The North West Iron Ore Alliance was formed in 2007 to support the development of a junior iron ore sector in the Pilbara. The member companies – Atlas Iron, BC Iron, Brockman Resources and FerrAus – have agreed to cooperate on issues such as infrastructure development and access, statutory approvals and community development. 

Collectively the members of the North West Iron Ore Alliance have the potential to deliver over 50 million tonnes of iron ore per annum by 2014, generating approximately $165 million in State royalties per annum.

August 4th (The Age) – POLITICAL intrigue and rising resources nationalism has raised fresh doubts over Rio Tinto’s grip on its $US6 billion ($A6.46 billion) Simandou iron ore project in Guinea.

Rio has portrayed the proposed development of the huge iron ore deposit as a Pilbara in the making.

And because of its importance as a growth project, it is a key plank in Rio’s defence against BHP Billiton’s $170 billion takeover bid.

But a rattled Rio has revealed that it has received correspondence from Guinean President Lansana Conte purporting to rescind the Simandou mining concession.

Along with its partner in the project, the World Bank’s International Finance Corporation, Rio is studying the issues raised in the correspondence.

Rio said it was “confident that its arrangements are in all respects in conformity with Guinean laws and that it has complied with its obligations”.

It said it had negotiated and executed the mining concession in “full transparency with the Guinean Government”.

Rio’s potential loss of Simandou came as President Conte sacked Secretary-General Mamady Sam Soumah. State TV said Mr Soumah would be replaced by Alpha Ibrahima Keira, the president’s son-in-law.

It was Mr Soumah who first raised tenure concerns for Rio over Simandou in May when he said the Government would be reconsidering the concession because of irregularities in the original agreement. Just as ominous, Guinea’s latest threat to Rio’s Simandou ownership follows the return to Beijing of a Chinese trade delegation offering billions of dollars of investment in Guinea in return for Chinese ownership of resource projects.

There is long-running unease among foreign resource companies in Guinea because of a special committee set up to renegotiate all mining agreements, ostensibly to capture a bigger share of the boom in commodity prices.

Even so, Guinea’s Mines Minister, Ahmed Kante, said early last week that Rio’s Simandou iron ore mine was on track and would benefit Guinea and the company.

The question over Simandou ownership could not come at a worse time for Rio. In May, Rio called on the market to start ascribing some value for the project in valuations of the company — an effort to close the widening gap between the imputed value of BHP’s 3.4-for-1 conditional scrip bid and Rio’s share price.

But shortly after Rio’s call to the market, the first query on Simandou’s mining concession from the Guinean Government surfaced. Somewhat ironically, it was BHP managing director Marius Kloppers who some time later warned about getting too excited too early about projects subject to high levels of sovereign risk. He used BHP’s bauxite-alumina project plans in Guinea as an example.

Rio has spent or committed to spend $US300 million on Simandou.

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 24th (Business Spectator) – Australiasian Resources Ltd’s shares have surged 32.6 per cent to $1.585 after it announced it had received a $327 million takeover proposal from Billionaire Clive Palmer, who is planning to establish a new Australian resources group.

The iron ore miner said it had received a takeover proposal from Mr Palmer’s company Resource Development International Ltd (RDI), which already holds a 66.37 per cent stake in Australasian.

Under the proposal, RDI has placed a notional price of $2.20 on each Australasian share. Shareholders who accept the offer would be paid in RDI shares.

Mr Palmer wants to create a resources group to rival BHP Billiton and Rio Tinto and plans to list RDI, and if successful complete its merger with Australasian, by late 2008.

Australasian has been working to develop its proposed $2.7 billion iron ore mine, Balmoral South, in Western Australia with Chinese company Shougang Corp, which has a significant investment in the miner of 6.36 per cent.

It has been reported that Mr Palmer is seeking Chinese investment for his company, and would approach Shougang and Baosteel, seeking financial interest.

RDI will have a portfolio that includes iron ore, with a 10-billion tonne iron ore resource in the Pilbara, nickel, including the proposed Gladstone nickel project and steel mill, and other energy interests.

Through a strategic alliance MEO Australia is set to become the core of the new group’s energy division, while keeping a separate listing.

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 18th (Iron Ore Daily Post) – Aussie Polaris Metals has published its presentation for Mining Aust-Asia Conference, which provides a briefly report on the company’s projects and plans, as well as its main financial figures. Click and read the latest Polaris Metals Report.