FerrAus chairman John Nyvlt yesterday called on the company’s shareholders to approve the bid by China Railways Materials (CRM) to take a 12% stake in the iron ore producer.
In a letter to shareholders in the company’s annual report, Nyvlt said the investment underscores the value of FerrAus and its Pilbara iron ore assets.
“The board considers the strategic cooperation with CRM a landmark step towards the objective of establishing local infrastructure to transport FerrAus iron ore to market,” he said.
“This infrastructure would unlock the immense value contained in the substantial direct shipping hematite resources owned by FerrAus and potentially, those of other East Pilbara iron ore juniors.”
FerrAus announced the strategic cooperation agreement and proposed share placement with a subsidiary of CRM in September this year.
FerrAus will make a placement to the subsidiary to take a 12% holding in the company, calculated on a fully diluted basis.
This is expected to raise around $12.6 million.
Shareholders will be asked to approve the proposed transaction at this year’s annual general meeting on 27 November.
CRM is a Chinese state-owned enterprise that provides materials for the construction and operation of China’s railway systems.
Another Chinese company, Western Mining, became a major shareholder in July 2008.
According to Nyvlt, Western Mining is a top-tier base metals mining and smelting company that has assisted the FerrAus with its relationships in China.