another milestone - $13, page-4

African-based Riversdale Mining has rallied to a record high, having climbed 65 per cent this year, making it the best performer in the S&P/ASX 200 Energy Index.

RIVERSDALE Mining is inviting bids from global miners for up to 50 per cent of a major coking coal deposit in Mozambique.

The miner is looking for the partner as it prepares to sign off on a binding $US800 million deal with a Chinese steelmaker for an adjacent project.

It shows how miners are seeking to take advantage of a global demand boom for coking coal - a key ingredient in steelmaking - by attracting partners with mining expertise or the ability to build infrastructure such as ports to accelerate new mine developments.

Interest in resource-rich southern Africa has intensified because it faces markets in China and India, where rapid urbanisation has prompted a surge in steel imports. It also reflects a growing appetite for risk among investors, as the region has suffered from political instability in recent years.


Riversdale chairman Michael O'Keeffe said developing the Tete East licenses in Mozambique - estimated to contain at least 5 billion tonnes of coking coal - on its own would leave it overstretched because it already has the neighboring Benga and Zambeze developments in the pipeline.

"It would be physically impossible for a company of our size to do three projects," Steve Mallyon, managing director, told Dow Jones Newswires.

"We will bring in a big mining house to come in and be part of the process," said Mr O'Keeffe. "We will look at 50-50 (shares) and they will manage it."

The company said it would consider asset swaps with miners and would be interested in breaking out of southern Africa and moving into other bulk products, identifying hematite iron ore as an option.

"We don't have spare cash to go and just buy anything, but we may be in a position to trade 50 per cent of Tete East for something that's really nice that should generate us good cash flow," Mr O'Keeffe said.

Although there is no urgency to do a deal with a miner, Mr O'Keeffe said Riversdale needs to complete a pre-feasibility study for Tete East over the next three years or risk losing the licenses under the terms of its agreement with the government of Mozambique.

Shares in Riversdale have nearly doubled over the last 12 months to $10.79 from $5.74, giving the Sydney-based company a market value of $2.61 billion.

Riversdale expects to produce the first coking coal from the 4-billion-tonne Benga project in the second half of next year and is moving to convert June's preliminary agreement with China's state-owned Wuhan Iron and Steel Corp., or Wisco, to invest in the neighboring Zambeze project into a binding deal.

Wisco has completed due diligence on the investment, which will see it take a 40 per cent stake in the Zambeze mine and a minority share in the Australian miner for $800 million, Mr O'Keeffe said.

But Wisco - the parent of Shanghai-listed Wuhan Iron & Steel Co. - has not met a 120-day deadline to formally sign off on the binding agreement, meaning there is technically potential for a rival to come in and trump the Chinese company's offer.

However, Mr O'Keeffe said the negotiations were "in good faith" and approvals from China's government, including from the State-owned Assets Supervision and Administration Commission, were now seen as formalities.

"We have something the whole world wants, and that makes it easier to negotiate with people," he said.

The Chinese approvals were on track to be completed within 30 days, he said. The deal will also require support from Australia's Foreign Investment Review Board.

Mallyon said Zambeze's reserves are currently estimated at 9 billion tonnrs of hard coking coal, but this is likely to rise, as Riversdale has only explored a third of the acreage covered by the project.
Despite the global economic downturn, Mozambique?s real GDP growth is forecast to remain strong at 4.8% in 2009 and 5.2% in 2010;