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re: ubid by early 2007 Capital Expenditure
Balmoral will be responsible for the construction and start up of the Project. It has agreed with Mineralogy that
it will arrange all the financing to pay for such construction and start up (including but not limited to, mining
facilities, equipment, production plants, ports, power station, desalination plants, roads, pipelines and all
necessary associated infrastructure) .
The estimated capital expenditure payable for Balmoral is US$1,100 million (excluding the further drilling
obligation described below.)
Some of the infrastructure for which Sino-Iron and Balmoral are required to fund construction is outside the
project area of Sino-Iron and Balmoral. According to the preliminary plan which is subject to final feasibility
study, infrastructure outside the project area of Sino-Iron and Balmoral may include conveyor belt to the port,
port facilities (including jetties, loading and unloading facilities and related infrastructure) and water and
power lines and desalination plant (the estimated cost expenditure for which is approximately US$735 million
(approximately HK$5,733 million), being part of the US$2,470 million (US$1,370 million for Sino Iron and
US$1,100 million for Balmoral) payable by Sino-Iron and Balmoral for the estimated capital expenditure).
Title to those facilities will remain with Mineralogy as it is the owner of the land. However, Sino-Iron and
Balmoral will have the right to use the facilities, on paying the operation and maintenance cost and on terms
which are fair and equal as compared to other users of those facilities, during the Project life. If there are other
projects commenced in the area by participants seeking to use the port or other facilities, those new participants
will be obliged to pay an amount to Sino-Iron and Balmoral, to effectively share the capital costs associated
with construction of the facilities. The intended capacity of the port to be constructed by Sino-Iron is sufficient
to cater for the needs of Balmoral and Sino-Iron in relation to export of the products.