andrew forrest does not lose

Below is an article posted on "The Australian's" website for publication tomorrow I think.

Andrew Forrest does not lose. Cazaly are on a winner here.



CAZALY Resources and Andrew Forrest's Fortescue Metals Group are plotting a joint bid to exploit the historic Rhodes Ridge deposit in the Pilbara, one of the world's biggest untapped iron ore resources.

Cazaly believes it has found a way to wrest control of Rhodes Ridge, which was discovered in the 1950s by Pilbara pioneer Lang Hancock and his business partner Peter Wright, from 50 per cent owner Rio Tinto.

It is understood that Cazaly will rely on documents it believes show Rio Tinto has sat on the deposit - whose 2 billion tonnes of ore is worth about $200 billion at current prices - for more than 30 years without conforming to various state acts in Western Australia. The company also believes Rio Tinto has not complied with its obligations to develop the project, meaning its rights to the deposit have been dissolved.

Cazaly is too small to develop the deposit by itself but under the terms of the proposed joint venture with Fortescue, Mr Forrest's company would agree to develop the deposit in return for paying Cazaly a royalty of 1 per cent of production. The royalty would eventually be worth hundreds of millions of dollars a year to the junior miner.

Cazaly managing director Nathan McMahon and Mr Forrest, Australia's richest man, were unavailable last night. Cazaly is expected to announce the deal - which will forever change the dynamics of the Pilbara region - when it emerges from a two-week trading suspension. The Perth-based company has been suspended since June 4 pending the announcement of an acquisition.

It was unclear last night how the proposed deal would affect the other owners of Rhodes Ridge, which lies about 60km west of the Pilbara mining town of Newman in the northwest of Western Australia.

Rhodes Ridge has been at the centre of a long-running legal battle between Gina Rinehart, the billionaire daughter of Hancock, and the children of Wright.

The 50 per cent of Rhodes Ridge not owned by Rio Tinto has been split equally between Ms Rinehart's Hancock Prospecting and Wright Prospecting, owned by Wright's children Angela Bennett and Michael Wright. Wright Prospecting has been seeking Hancock Prospecting's 25 per cent stake.

Almost all of the resource-rich Pilbara has been locked up in the scramble to cash in on the heady demand for Australia's raw resources from the emerging economies of China and India.

Cazaly is best remembered for pegging the lucrative Shovelanna deposit after Rio Tinto missed the deadline to renew its exploration licence for the deposit in September 2005.

Despite it having legitimate claims for ownership to the tenement, the West Australian Government stripped Cazaly of Shovelanna about eight months later, when then resources minister John Bowler ruled that it was in the public's interest that the ground be held by Rio Tinto.

Rio Tinto had paid the fees associated with the licence renewal and blamed a tardy courier for failing to deliver the required documents to an outlying regional office of the WA Department of Industry and Resources on time. Rio Tinto chairman Paul Skinner then suggested that even though Shovelanna had been returned, his company was under no moral obligation to develop the tenement. It had not prepared a development plan for the ground in the 30 years it had held the deposit.

Fortescue is the biggest ground-holder in the region, followed by Rio Tinto and BHP Billiton.