11 April 2014
It has been on the drawing board for decades and now a small West Australian mining company says it has secured billions of dollars in funding to build the stalled Oakajee port and rail project in the state’s Mid West.
Padbury Mining has told the Australian stock exchange it has secured $6.5 billion from Australian private equity investors to create an iron ore export region akin to the Pilbara.
The company’s share price soared as much as 150 per cent on the news on Friday but because of the project’s chequered history, there is scepticism it will never get off the ground.
There has also been cynicism about the deal because the private equity investors have not been named. That saw the company go into its second trading halt this week on Friday and it has promised to reveal more details by next Tuesday.
Opening up stranded iron ore deposits in WA’s Mid West has been a dream for many a WA premier.
Last year, Colin Barnett failed to get a funding deal that would save the Mitsubishi-operated Oakajee port and rail project and the venture was suspended.
Now Padbury Mining says it can get the plan to build a deepwater port and a railway to transport iron ore from the region off the ground.
Padbury Mining’s chief executive Gary Stokes says he is confident that the long-hoped-for port and rail infrastructure development can be completed.
He is hopeful that the region’s iron ore explorers will use the infrastructure to get their product to port.
“We now have the funding secured for a project that really is probably a game-changer, certainly for the Mid-West region, even for the state of WA,” he said. “It’s a whole new iron ore province.”
Mr Stokes is currently in Korea to try to get South Korea contractors on board.
But he will not say who the Australian private equity investors are.
“At this stage they want to maintain their anonymity and we’re respecting that,” he said.
Cynicism remains despite share price surge
“I think we’re still fairly sceptical until we can see some details around the announcement,” Bell Potter Securities investment advisor Giuliano Sala Tenna said.
“You know, there’s been many parties that have tried to get this project up and to date and haven’t been able to succeed.”
Mr Sala Tenna also says that questions remain because of the difficulty of getting finance for such a large project.
“Now we’ve got an iron ore junior here with a $67 million market cap, now the suggestion is they’ve secured $6 billion worth of funding.”
It took Gina Rinehart’s Roy Hill project in the Pilbara 18 months to negotiate a $7 billion finance deal with a consortium of local and overseas lenders.
Padbury Mining also hasn’t secured offtake deals to pre-sell its lower-grade magnetite iron ore to customers.
Mr Sala Tenna says pre-sales agreements are needed to attract investors.
“To get this up you’re going to need some financing from some of the larger banks and for them to get involved they’re going to need to see offtake agreements,” he said.
Mr Stokes is a former WA public servant who was fined $1,500 for leaking confidential information to former WA premier Brian Burke.
There was no conviction recorded.
Padbury Mining told the stock exchange that negotiations were underway with the WA Government to obtain the right to build the project.
“Padbury has been engaged with the Western Australian Government for some time,” it said.
But the WA Government told the ABC in a statement that it was not in detailed discussions with any new parties who were supporting the development.
“The Government is yet to enter into detailed negotiations with any new proponent for Oakajee Port and Rail infrastructure.”
Courtesy of ABC News
11 April 2014