Palmer strikes a deal for Pilbara iron ore

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Queensland billionaire Clive Palmer says he has agreed on a structure to develop Australasian Resources’ Balmoral South iron ore project in the Pilbara.

Australasian announced today that Palmer’s privately owned company Mineralogy had granted it the mining rights to an extra billion tonnes of ore at Balmoral South.

Palmer’s majority owned Australasian had the right to mine 1 billion tonnes of Balmoral ore, but the deal has now extended that to 2 billion.

While light on detail Australasian said a non-binding memorandum of understanding with Mineralogy had been reached.

Mineralogy holds tenements and the rights to mine the estimated 2.8 billion tonnes of magnetite iron ore at Balmoral South.

It has also won the majority of environmental approvals for the project.

The Royal Bank of Scotland is working with Mineralogy on a $US500 million bond issue to help fund Balmoral.

China Metallurgical Group Corporation has also agreed to assist Australasian “to raise 75 per cent of the project costs by way of export credit from Chinese banks”.

A 2008 feasibility study put the capital cost of the mine development at $2.7 billion but Resourcehouse pulled this estimate back to $2 billion earlier this year.

Part of the MCC deal will see it appointed as engineering, construction, and procurement contractor for Balmoral.

The Australasian-Mineralogy deal looks to be an attempt to salvage from the failed $3.4 billion Hong Kong float of Resourcehouse, of which Balmoral South was one of the flagships.

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