sydney morning herald this morning

Just a quick cut and paste for anyone who wants to read and not in Sydney.

"IT WAS an exuberant week for iron ore.

Fortescue Metals began loading the first shipment bound for China from its $4 billion Pilbara project, amid suggestions the Chinese will soon agree with Rio Tinto and BHP Billiton on a rise of more than 80 per cent in the benchmark price. Then Aquila Resources unveiled its own plans for a $US3.8 billion ($4.03 billion) development in the Pilbara.

So perhaps it is no surprise that junior explorers have begun to capitalise on the goodwill towards the commodity to release ambitious targets of their own.

Maximus Resources yesterday revealed it was targeting the discovery of up to 3 billion tonnes of magnetite at its Canegrass iron ore and vanadium prospect in Western Australia.

The company's share price almost doubled following the announcement to close 15.5c higher at 29c - 9c above the exercise price of 32.4 million unexercised 20c options that expire on June 30. The options were issued as free attaching options in conjunction with the company's float in 2005, and directors hold 5.5 million of them.

Maximus's managing director, Kevin Wills, who also heads the Pilbara iron ore hopeful Flinders Diamonds, said the target of finding 1.7 million to 3 million tonnes of magnetite grading between 20 per cent and 35 per cent had been set after a recent gravity survey. The area has never been drilled, but Maximus intends to start later this month.

Dr Wills said it would take "some time" to drill out a 3-billion-tonne resource. Magnetite grading 20 per cent - well below the grades of competing projects -"might not be economic" but magnetite grading 35 per cent "probably is".

Dr Wills said he was not too surprised the target had sent his company's shares soaring because iron ore "is a very popular commodity at the moment".

"We realised announcing our target would have the potential to move the share price," he said. "We were hoping it might be a positive."

He said he had hoped shareholders would exercise the expiring 20c options "for a long time" and said they appeared likely to be exercised if the share price remained above 20c. He added that he planned to exercise his own 1.575 million options if they remained in the money.

Because Maximus has yet to drill the prospect, there is no information about the level of impurities or whether it is economically viable.

An analyst said investors needed to be aware of the risks of buying shares without looking into the details of the quality of the iron ore and the availability of infrastructure. "Some things aren't as rosy as they appear on face value," the analyst said.

Flinders recently confirmed its own exploration target of up to 380 million tonnes of hematite with an expected grade of 56 per cent, but is also yet to drill holes."