Cazaly leaps as investors scrambleKevin AndrusiakFebruary 28,...

Cazaly leaps as investors scramble
Kevin Andrusiak
February 28, 2006
INVESTORS piled into junior explorer Cazaly Resources yesterday, betting that the West Australian Government would soon deliver the lucrative Shovelanna iron ore deposit to the junior explorer.

Cazaly's stock price surged 26c or more than 16 per cent to $1.86 yesterday, breaking out of its $1.50 to $1.60 trading band of the past couple of weeks.

"I believe it is a lot of informed investors believing in a successful resolution under the terms of the Mining Act," said a Perth-based broker.

"It's almost like a game of high-stakes poker, except investors are banking on the cards being tilted in Cazaly's favour because of the Mining Act."

Cazaly claimed the Shovelanna deposit in September last year after Rio Tinto, lead manager of the joint venture partnership and owner of the lease since 1989, failed to renew an exploration licence.









Rio Tinto since blamed courier company TNT and has sought a ruling from the WA Government, arguing it is in the state's interest for the powerful miner to retain Shovelanna as part of its long-term plans.

Cazaly has since signed a deal with Rio Tinto's rival BHP Billiton for an offtake agreement worth $300 million a year.

Sources say the government decision is likely to be made soon, possibly within a fortnight.

It is believed Resources Minister John Bowler wants a resolution soon to limit market speculation.

The WA Department of Industry and Resources has received submissions from both sides in the dispute.

"There is one outstanding issue to be resolved," a spokeswoman said. She would not clarify what the issue is, but it could be Cazaly's insistence on not replying to a new submission from Rio Tinto, which would draw the matter out further.

Shareholders have pumped more than $70 million into Cazaly. The stock price has soared from 28c in September to $1.86 yesterday. Most have been day traders, but recent volumes suggest others are building big stakes in the company. Market rumours suggest BHP and Fortescue Metals Group could be interested in a play for Cazaly.