doubts grow on oakajee port project , page-5

Murchison Metals rejects Oakajee rumours

Published 11:58 AM, 27 Sep 2010 Last update 3:01 PM, 27 Sep 2010


By a staff reporter, with Reuters

Iron ore group Murchison Metals Ltd says speculation over its joint venture with Japan's Mitsubishi Corp is unfounded, and it doesn't have any evidence to indicate a change of support from the Western Australia government.

The miner was placed in a voluntary trading halt, after the stock plunged nearly 12 per cent on a media report that its Oakajee Port and Rail project (OPR) was in doubt.

The Australian newspaper on Saturday cited speculation that Japan's Mitsubishi Corp could pull out of a mining joint venture with Murchison, which in turn could lead Mitsubishi to also abandon its partnership in the $4.38 billion port project.

The DealReporter website also reported on the rumours.

In a statement to the Australian Securities Exchange (ASX), Murchison said it had been aware of the rumours "for some time", but internal inquiries had found no evidence to suggest Mitsubishi intended to pull out of any of the joint ventures or dilute its holding.

"In its report, DealReporter quoted a Mitsubishi spokesman in Tokyo as saying: 'Nothing has changed in our stance... we remain committed to devote our energy into the 50/50 joint venture with Murchison'," the company said in the statement.

It said Mitsubishi has spent about $280 million on the joint ventures to date.

"The legally binding contractual agreements, which were signed with Mitsubishi in September 2007, are unchanged.

"In particular, there has been no change to the contractual arrangements in relation to the residual payment to be made by Mitsubishi to Murchison for its 50 per cent interest in the projects."

It expects the residual payment to be made in 2011, and first iron ore to go through the new Oakajee port in 2014.

Murchison said it has no evidence to suggest weakening support form the premier or the state government either.

Western Australian premier Colin Barnett said "no comment" when asked by The Australian about his confidence in the project.

In March, Mr Barnett said the port project was vital for Western Australia and his government was committed to commissioning the port in five years.

The new port would handle iron ore from a new mining province being developed about 1,200 km south of the Pilbara iron belt.

Fellow miner Gindalbie Metals is also counting on the port being built at Oakajee to maximise its production to around 30 million tonnes a year by 2020.

Murchison's main asset is its Jack Hills mine, which commenced production in late 2006 and is an equal joint venture between Murchison and Mitsubishi.

The ASX had asked Murchison at 1125 AEST why the company's share price fell from $1.81 at the close on Friday to an intra-day low of $1.51 on Monday.

Murchison shares resumed and closed down 10.22 per cent to $1.62.