Mmmm why would you bid for more stranded assets unless you had a rail deal??? Wah Nam already dictating terms.
By David Winning
Of DOW JONES NEWSWIRES
PERTH (Dow Jones)--Brockman Resources Ltd. (BRM.AU) expects to make an initial bid to buy iron-ore assets in Australia's resource-rich Pilbara region put up for sale by Iron Ore Holdings Ltd. (IOH.AU), Brockman Chairman Barry Cusack said Monday.
"We have a board meeting in two days' time but, yes, I think we will bid," Cusack told Dow Jones Newswires on the sidelines of the Boao Energy & Resources conference in Perth.
In late May, Iron Ore Holdings appointed Perth-based PCF Capital Group to conduct a strategic review of a cluster of iron-ore deposits adjacent to Brockman's Marillana project.
The deposits, known as the Central Satellites, contain 208 million metric tons of iron ore, including 77 million tons in the more-reliable indicated category. Mineral resources describe total quantities of ore in the ground, whereas reserves describe the portion that can be recovered profitably.
Consolidation among junior miners with tenements in the Pilbara area of Western Australia state is intensifying, as management look to generate economies of scale from iron ore mines and make savings on the cost of building infrastructure.
Brockman is seen by many analysts as an aggressive bidder for iron-ore resources in the Pilbara after Hong Kong's Wah Nam International took a controlling stake in the company earlier this year following a prolonged takeover campaign. Wah Nam also bid for another miner in the Pilbara, FerrAus Ltd. (FRS.AU), but dropped its interest after Atlas Iron Ltd. (AGO.AU) trumped its offer.
Brockman owns the Marillana iron ore project, which is located close to a railway line that can move processed ore to Port Hedland around 270 kilometers away, where it has 18.5 million tons of iron-ore export capacity.
Cusack said it made sense for Brockman to buy assets near to Marillana, such as those being auctioned by Iron Ore Holdings, if it enables the company to accelerate output and use its allocated capacity at Port Hedland more quickly.
"It's not a desperate deal (for Brockman), but there is logic in some consolidation in the Pilbara. Certainly we are looking at what value there might be to us," he said.
Last month, Iron Ore Holdings Managing Director Alwyn Vorster said 12 companies, including Indian and Chinese steelmakers, had been allowed to examine data on the Central Satellites iron ore deposits.
According to Cusack, preliminary offers are due to be lodged with PCP Capital this week.
BRM Price at posting:
$2.86 Sentiment: Buy Disclosure: Held
