Chinese company Baotou Iron & Steel will invest up to $40 million in a joint venture with iron ore producer Centrex Metals, after receiving an unconditional approval from the Foreign Investment Review Board (FIRB) yesterday.
Under the terms of the joint venture, Baotou will pay the $40 million to acquire a 50% interest in the South Australian iron ore producer’s Bungalow magnetite deposit.
The tenement is located nine kilometres north of Cowell in the Eyre Peninsula. Centrex chairman David Lindh said the approval was a significant step for the project.
“We have been in discussions for many months and it is very pleasing that Centrex and Baotou can now accelerate exploration at Bungalow,” he said.
The company has ambitions of becoming a major player in Australia’s iron ore industry. Baotou has also received approval from China’s National Development Reform Commission (NDRC).
The Chinese company is now applying to China’s State Administration of Foreign Exchange (SAFE) to approve the remittance of funds.
Bautou will make two payments of $8 million to acquire up to 20% of the tenement, before paying a final instalment of $24 million to bring its holdings to 50%.
A joint venture company will be established to manage a bankable feasibility study and operations.