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Mineral Resources confirms Aquila investment, eyes West Pilbara project

Mineral Resources confirms Aquila investment, eyes West Pilbara project

Photo by Bloomberg

12th June 2014

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – ASX-listed Mineral Resources on Thursday confirmed that it had acquired more than 52.6-million shares in takeover target Aquila Resources, saying it had been investigating a development plan for Aquila’s West Pilbara iron-ore project since before the Baosteel-Aurizon takeover offer was launched.

Mineral Resources bought about 12% of Aquila’s shares at A$3.75 apiece on Tuesday, which was above the current offer price of A$3.40 in cash made by a joint bid between China’s Baosteel and Australian rail operator Aurizon Holdings.

Mineral Resources’ investment in Aquila has resulted in speculation that Baosteel would need to increase its offer price for the junior diversified miner, which was yet to make a recommendation on the takeover offer.

Mineral Resources said on Thursday that the company’s significant investment in Aquila was “appropriate” to ensure that Mineral Resources was well positioned to be actively involved in the West Pilbara project.

MD Chris Ellison said that the company would fully engage in collaborative discussions to ensure that the project is brought into production as soon as possible.

He pointed out that Mineral Resources had finalised a total mine-to-port development plan for the West Pilbara project, which included all processing- and mine-related infrastructure, as well as the supply chain through to shiploading, and was prepared to enter into discussions with the project stakeholders with a view to entering lump-sum contracts for construction and delivery of the port and rail infrastructure, and to build, own and operate arrangements for the development of the project.

Aquila was looking at a staged development for the West Pilbara project, with Stage 1 requiring a capital investment of A$5.7-billion to deliver about 30-million tonnes a year of iron-ore, over a 15-year mine life.

“We are confident that we can play an important role in delivering the West Pilbara project on attractive terms through building the port and other infrastructure for the project, and build-own-operate arrangements in respect of the mine, which we have successfully employed earlier,” said Ellison.

“We have the financial capacity to make a meaningful capital contribution towards the development of the project and will now proceed to engage with all major stakeholders, including Aquila and Baosteel, to facilitate the best outcome possible.”

He added that the Mineral Resources board also considered the company’s involvement in the West Pilbara project as an outstanding opportunity to secure additional long-term build-own-operate contracting opportunities for its core contracting business.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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