stokes paid $2.25m for oakajee ip

Old news below – note the date, June 2011. A grandiose scheme like this would take a decade to eventuate, so a junior explorer like PDY would unlikely play a significant role. One needs more than a railway line and deep-water port to get a magnetite area up and running, although there are also hematite (so-called Direct Ship Ore, or DSO) deposits in Oakajee's hinterland. If PDY plays a catalytic role, rather than a significant role, and it gets some multiple of its investment in the IP mentioned below, that would be a good outcome. I am fairly sure that the grandiose Oakaeee scheme will happen, but when is another matter.

Junior explorer offers plan B to save Oakajee Andrew Burrell and Amanda O'Brien From: The Australian June 25, 2011 12:00AM

The proposed Oakajee project port facility site near Geraldton, WA. Source: The Australian

JUNIOR explorer Padbury Mining may emerge as a saviour of the planned $6 billion Oakajee port and rail network in Western Australia after Chinese metals giant Sinosteel this week threw the troubled project into disarray by shelving development of its $2bn iron ore mine. Shareholders in Perth-based Padbury, which has a market value of just $30 million, this month ratified the purchase of the intellectual property for Oakajee that was developed by China-backed Yilgarn Infrastructure, which lost a WA government tender to build the project in WA's Mid-West region in 2008.

Yilgarn, which was backed by five of China's biggest steel mills and had a financing agreement with China's Exim Bank, was overlooked in favour of Oakajee Port & Rail, a consortium owned by Perth miner Murchison Metals and Japan's Mitsubishi.

Sources close to the Mid-West miners say the tariffs under the Yilgarn model would be much lower than those being proposed by OPR.

This is because under the Yilgarn model the miners would also have become shareholders in the infrastructure assets, which would have been funded with long-term Chinese debt.

Under the OPR model, however, the infrastructure becomes a "profits centre" for its owners, and the miners are expected to pay relatively high tariffs for ore haulage and port usage.

Padbury chief executive Gary Stokes said yesterday that the explorer's $2.25m purchase of the IP would provide it with a "plan B" to help solve the region's infrastructure woes should OPR be unable to deliver the project in its current form.

Speculation that OPR will need to be overhauled has resurfaced after Sinosteel – one of three foundation customers for the port and rail network – revealed it was sacking 43 staff and "parking" its Weld Range mine because of concerns over Oakajee's cost blowouts and delays.

Sources close to the Mid-West miners said the Yilgarn IP – which includes financial modelling and engineering work – would be needed if a new model emerged to develop Oakajee.

WA Premier Colin Barnett said he was working to get China to help salvage Oakajee.

"It's not up to me to tell private companies how they should align themselves. All I can do is suggest ways forward," he said yesterday.

"China must be formally involved. China is the prime investor in the mines, China is the customer for the mines and it is now a matter of pride for China that it actually takes part in the infrastructure development."

The Premier ruled out asking for more money from the federal government, which has already committed $339m for Oakajee to match state funds.

"If we have to change our financial arrangement, we'll do it in such a way that it doesn't mean extra government spending."