cautious

Oakajee

The announcement by junior miner Padbury Mining of it securing $6.5Billion for funding of the Oakajee port and regional rail system last week captured national interest. The news was welcomed by the iron ore industry as Oakajee deep water port is critical to its development potential, but the industry has suggested that there are many steps yet to be achieved before it can be presumed the project will proceed.

Since Padbury Mining's announcement, Premier Colin Barnett has advised of progress in discussions with the substantial Chinese state-owned company CITIC Group. This announcement included the prospect of CITIC working with Mitsubishi to develop the Oakajee Port and Rail system.

Oakajee’s delivery would provide a substantial economic boost to the region however it is appropriate that the news is considered cautiously as there are many critical steps that must be negotiated by any proponent before the project is realised. In general terms the proponent will need to:

• Negotiate and secure State Government support and Agreements

• Confirm the port and rail elements and configuration

• Secure all approvals

• Undertake design and determine costs

• Negotiate contracts with mine customers on the basis of acceptable terms and tariffs

• Call tenders and construct


Construction alone could be expected to be 2 1/2 to 3 years.

The Australian Stock Exchange has also required Padbury to reveal relevant details of the investors, which at this point is another reason for caution before making assumptions regarding the project.