STORYVIDEOAurox May Sell 50% Stake in A$1.3 Billion Ore Project...

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Aurox May Sell 50% Stake in A$1.3 Billion Ore Project (Update1) Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Jesse Riseborough and Bernard Lo

Dec. 4 (Bloomberg) -- Aurox Resources Ltd. may sell a half share in its planned A$1.3 billion ($1.2 billion) iron ore mine in Australia to a Chinese partner to help fund the project.

“We are attracting a lot of attention from overseas groups now,” Charles Schaus, managing director of the Perth-based company, said in a Bloomberg Television interview. He’s aiming to complete a finance accord by March after flagging the China talks in July.

Steel mills in China are investing in Australian iron ore projects to secure supplies to feed rising demand for automobiles and buildings. Aurox has signed sales accords with Hebei Iron & Steel Group, China’s second-largest mill, and closely held Chinese steelmaker RockCheck Steel Group.

“The groups that we will be selling our product to are certainly on the list with regards to finance,” Schaus said in the interview from Sydney. “It’s a very interesting project to the groups we are starting to speak with. We are following up those discussions next week.”

Aurox declined 1.8 percent to 27 cents at 11:35 a.m. Sydney time on the Australian stock exchange. The company is seeking to start building the mine in March.

The sale of a 50 percent stake in the project to a Chinese group will comply with Australia’s foreign investment guidelines, Schaus said. It’s seeking to start shipments at an annual rate of 6 million metric tons of magnetite iron ore concentrate in 2012. A second-stage expansion of the mine is estimated to cost A$720 million.

“There is no doubt China is continuing to grow, their demand for iron ore is continuing to increase,” Schaus said. “Our feeling is the price will increase in the future and certainly will be rock solid when we come in to the market in 2012.”

Aurox plans to pipe output 110 kilometers (69 miles) from its Balla Balla mine site to Port Hedland in northern Western Australia for shipping.

To contact the reporters on this story: Jesse Riseborough in Canberra at [email protected]; Bernard Lo in Hong Kong at [email protected];

Last Updated: December 3, 2009 19:34 EST