Brockman Resources has found a defence against a scrip-only take over bid from Hong Kong investment group Wah Nam.
It is in talks with Andrew Forrest’s Fortescue Metals for a deal that will include iron-ore rail haulage, port and marketing.
The deal is in “advanced negotiations”, according to Brockman, and would be the first between a junior iron ore group and a major producer.
The end-to-end rail haulage, port access and marketing agreement is for Brockman’s wholly owned Marillana iron ore project in the Pilbara.
Brockman said there is no guarantee that the negotiations will definitely result in a binding agreement with Fortescue, but they are “highly encouraged with the progress of negotiations.”
Marillana will shed its “stranded” status if it manages to secure a deal in the new year, as it would begin producing 17 million tonnes of iron ore annually and Brockman said with such an agreement – at commercial rates and without loss of equity by Brockman – it would be able to complete a feasibility study on Marillana in the June quarter next year.
This would be followed by a final development decision in September.
The rejection of the scrip-only bid from Wah Nam has been reconfirmed by Brockman, who voiced “serious concerns over the underlying value and liquidity of Wah Nam shares,” and also added that the bid was highly conditional.
”Brockman does not need Wah Nam to bring the Marillana project into production or to fund its development,” the company said.
It also said that it did not need Wah Nam to gain access to Hong Kong investors.