Australasian's relisting a test for iron

Australasian's relisting a test for iron
Kevin Andrusiak April 16, 2007

AFTER more than five months off the ASX boards, Clive Palmer's Australasian Resources will be a good litmus test of the market's appetite for iron ore stocks when it rejoins the share market today.It comes back a markedly different company to what it was in December when it had a market capitalisation of $506 million. Since then, it has signed agreements with China's fourth-biggest steel maker, Shougang, to finance the $US2.1 billion ($2.5 billion) Balmoral project through an interest-free loan and added 201 million tonnes into the probable ore reserve category.
Australasian is majority owned by Mr Palmer, who picked up much of the Balmoral ground in the iron ore-rich Pilbara region of Western Australia in the 1980s.
The company is one of a new breed of iron ore miners developing magnetite projects purely to feed Chinese demand. Others include Andrew Forrest's Fortescue Metals and Tony Sage's Cape Lambert.
Mr Palmer is estimated to hold between 60 billion and 100 billion tonnes of magnetite ore in his tenements, much of which could end up being vended into Australasian.
Last year, he sold off one block of land containing 1 billion tonnes to Citic in a deal worth $5 billion and vended key tenements, which form the basis of the Balmoral Project, into Australasian for a controlling stake in the company.
The project has State Agreement approval and its coastal proximity means it won't need to rely too much on infrastructure, which can lengthen the time to get a mine to the export stage.
Australasian is expecting 11.5 million tonnes of production a year, based on 5 million in concentrate, 5 million in pellets and 1.45 million in briquettes.
That will mean Australasian will have to build a hot-briquetted plant on site, but its forecasts suggest it can produce them for $US83.03 a tonne and they are worth three times that on world markets.
Shougang, which has an 8.4 per cent stake in Australasian, has first right to execute off-take agreements for 100 per cent of all products, but there is no sweetheart clause, the prices being set against world benchmarks.
First production is slated for 2010.
"The board believes the relisting marks an important milestone for the company's future as it moves towards the development of the Balmoral project," Australasian Resources managing director Darren Hedley said.
Mr Hedley believes Australasian will become a bigger company, in terms of gross revenue and EBITDA, than Newcrest Mining, Iluka Resources and Oxiana.

http://www.theaustralian.news.com.au/story/0,20867,21561925-5005200,00.html