Ann: Exciting Drilling Results continue from Bung, page-16

re: Ann: Exciting Drilling Results continue f... "POSCO"

Korean steel giant Posco has told Australia's richest woman Gina Rinehart it will pay for dredging in Port Hedland's harbour as part of a deal to acquire a stake of up to 15 per cent in the huge Roy Hill iron ore project.

The deal with Mrs Rinehart is also understood to include Posco buying 10 million tonnes of iron ore a year from the proposed 55mtpa Roy Hill project, which is slated for first production by 2014.

Although details of the deal between Posco and Mrs Rinehart's Hancock Prospecting remain scant, it looks set to be the trigger to finally develop Roy Hill. Roy Hill comprises a 2.4-billion-tonne iron ore resource 120km north of Newman.

Mrs Rinehart wants to build a railway to Port Hedland, where she has already been granted use of a 30mtpa berth at the South West Creek inner harbour development.

Posco said yesterday its decision to pay the undisclosed dredging costs would give it a 3.75 per cent stake in Roy Hill, as part of a plan to buy up to 15 per cent of Mrs Rinehart's project.

The offtake deal would increase the level of Posco's secured iron ore supply from 12.4 per cent to 30 per cent.

Posco is no stranger to WA, owning stakes in iron ore juniors Murchison Metals and Jupiter Mines and copper hopeful Sandfire Resources.

Mrs Rinehart could not be reached for comment last night. Last month, she kicked off a recruitment drive for senior executives to run Roy Hill.

Having already spent $100 million on Roy Hill, Mrs Rinehart said a year ago she was seeking a Chinese partner to help develop the asset.

Roy Hill could become Mrs Rinehart's third mine in the Pilbara, following in the footsteps of the operating Hope Downs joint venture with Rio Tinto and a proposed Hope Downs 4 expansion about 65km away.

Hope Downs has become one of Rio's most important Pilbara assets and a key reason why the mining giant was able to yesterday report record iron ore production for 2009.

Hope Downs produced 20.6 million tonnes last year, boosting the Rio-controlled Pilbara output to a record 202.2 million tonnes. Rio's share was 161.9 million tonnes, up 7.2 per cent.

Rio also enjoyed higher year-on-year production at its wholly owned Hamersley mines, including Paraburdoo, while its Robe River venture with Japanese partners benefited from higher West Angelas output.

Rio said most of the iron ore sold, including into China, was priced at benchmark or equivalent levels.

?Rio's junior partner Iron Ore Holdings enjoyed a 14.1 per cent share price rise yesterday as it announced more encouraging drill hits at its Pilbara projects.

Iron Ore, which hopes to become a producer late this year when a minegate sales deal with Rio over the junior's Phil's Creek asset kicks in, announced intercepts of up to 56m grading 59.9 per cent iron at its Koodaideri South project. Iron Ore's shares closed up 26? at $2.10.