China expands footprint in iron ore

In two iron ore-related deals, China Railway Materials (CRM) forged separate alliances with explorers FerrAus and United Minerals, both operating in WA’s Pilbara region.
In the third, China Guangdong Nuclear Power Holding Co. agreed a takeover of uranium prospector Energy Metals.
Another junior iron ore miner, Atlas Iron, reportedly revealed that it, too, had held talks with prospective Chinese investors although the company said it did not currently need fresh equity.
China Railway Materials could help both FerrAus and United Minerals to develop their Pilbara deposits, including new rail and port facilities needed for it to export their ore from the eastern Pilbara.
The United Minerals deal will help it develop its "Railway Iron Ore" deposit and is conditional on it supplying CRM with three-million tonnes of ore a year for ten years.
Through its wholly owned subsidiary Union Park Company Limited, CRM is to take a placement in FerrAus equal to 12 per cent of the fully diluted enlarged capital structure at the time of transaction completion. Based on the current capital structure of FerrAus, the investment would be approximately $12.6 million.
A nonbinding Strategic Alliance Agreement has also been executed by FerrAus and China Railway Materials.
FerrAus non executive chairman John Nyvlt said, “The strategic co-operation with China Railway Materials is a landmark step towards the objective of establishing local infrastructure to transport FerrAus iron ore to market.
“This infrastructure would unlock the immense value contained in the substantial direct-shipping hematite resources owned by FerrAus from multiple sites and potentially, those of other east Pilbara iron ore juniors".
All foreign sovereign investments need Australian government approval, and the queue of Chinese State investments awaiting the government's go-ahead is lengthening by the day.

Gindalbie gets the go-ahead
In other iron ore news, Gindalbie Metals advises that the Western Australian Minister for Environment, Donna Faragher, has given final State environmental approval for development of the Karara Iron Ore Project in Western Australia to proceed.
The decision is an important milestone for Gindalbie and its joint venture partner, AnSteel, as well as the entire Mid West region. The decision clears the way for on-site construction and development of the large-scale Karara Project to proceed during the fourth quarter of 2009.
Located 225km east of Geraldton in Western Australia’s Mid West, the Karara Project will be a major integrated iron ore project producing both DSO and high-grade magnetite concentrate over several decades.
The final State Ministerial approval follows the July decision to uphold all key appeals lodged by the Karara Joint Venture in relation to recommendations and conditions which formed part of the Environmental Protection Authority (EPA)’s overall positive recommendation for the Project released in May 2009.
Importantly, the Minister upheld the appeal on the Terapod deposit, clearing the way for it to be mined, together with the Blue Hills North deposit as part of the two million tonne per annum hematite phase of the Karara Project.
The Minister’s final approval was granted subject to the implementation of certain conditions. These conditions are consistent with Gindalbie’s existing environmental management and monitoring practices and will enable the company to undertake and maintain a sustainable approach to future mining and development activities.

Warwick & Atlas Iron announce merger
Warwick and Atlas Iron have announced their intention to merge by way of two Schemes of Arrangement (Schemes) under which Atlas will acquire all of the issued capital in Warwick.
The scheme will comprise one Atlas share for every three Warwick shares (implied value of $0.55 per Warwick share based on Atlas share price of $1.65). This represents a 48 per cent premium based on the price of Warwick shares over the past 30 days.
The proposed merger will create a new large-scale independent iron ore producer in the Pilbara, with an expanding production profile, a significant resource base and a large landholding with major resource growth potential.
The merged entity will have 154 million tonnes of DSO resources, plus exploration targets of 165 to 338 million tonnes at 56 per cent to 60 per cent Fe and a Pilbara landholding of more than 15,000 square kilometres.
Atlas is Warwick’s largest shareholder (22.25 per cent) and is mining and exporting iron ore from its 100 per cent owned Pardoo Iron Ore Project, located 75 kilometres by road from Port Hedland.
Atlas is planning to export one million tonnes during its first 12 months from Pardoo and together with Wodgina and Abydos the company is targeting exports at an annualised rate of six million tonnes per annum in 2010, growing to 12 Mtpa with production from Mt Webber by 2012.
Commenting on the transaction Warwick Chairman, Will Burbury, said, “Atlas has made a very attractive offer to Warwick shareholders which not only provides an immediate uplift in the value of Warwick shares but provides the opportunity to participate in the continued development of our projects, as well as exposure to existing production with a rapidly growing production profile and mining and marketing expertise.”