Iron ore site does deal before
ADELAIDE company Centrex Metals has locked in sales of about half the potential production from its Wilgerup iron ore project on Eyre Peninsula before even listing on the stock exchange.
It’s due to list today, after announcing yesterday it had signed an in-principle supply deal with Chinese company Shenyang Orient and Steel for $390 million worth of iron ore over five years, calculated at current long-term prices.
However, managing director Gerard Anderson stressed the deal was contingent on Centrex demonstrating sufficient reserves, and a positive bankable feasibility study of the project.
Shenyang had invested $3 million in the company and would be a 7.8 per cent shareholder.
Mr Anderson said the two companies had “agreed in principle for the sale of the first one million tonnes of hematite per annum for five years from the Wilgerup hematite deposit with the price being the long-term contract benchmark price”.
They were now negotiating shipping schedules and marketing.
“At current iron ore prices for comparable product, such a supply arrangement – which would represent around half of the output of the mine – would generate revenue of about $78 million a year,” Mr Anderson said.
Centrex expected planned to start drilling at Wilgerup within weeks and was hoping to start production in 2008.