chinese get slice of 5bn miner the age

Chinese get slice of $5bn miner

THE AGE

FitzGerald
July 4, 2008

GOLD Coast mining magnate Clive Palmer is out to create a major new Australian resources group with plans to raise $5 billion from mainly Chinese investors.

His typically bold plan is good news for Melbourne-based MEO Australia, which is set to emerge as the core of the new group's energy division while maintaining its separate listing.

Mr Palmer's planned float by the end of the year of Resource Development International (RDI) will go part of the way to allaying Chinese investor concerns that the Federal Government is intent on tightening access to Australia's mineral riches by foreign interests.

UBS and Macquarie are said to be supporting the float that will have as its main selling point a 10-billion-tonne iron ore resource in the Pilbara, part of the 160-billion-tonne resource that Mr Palmer's privately held company, Mineralogy, has its foot on.

Mr Palmer last year became the Gold Coast's first billionaire — he is worth $1.5 billion according to BRW — thanks to his 2006 deal with the China-controlled and Hong Kong-listed CITIC Pacific for it to mine up to 6 billion tonnes of magnetite iron ore from Mr Palmer's Balmoral deposit.

The plan is for the new company to be dual listed on the Australian and Hong Kong stock exchanges. Apart from iron ore, the new company will also house a proposed Gladstone nickel project and steel mill, and an energy portfolio.

The board is also tipped to include the services of former foreign minister Alexander Downer.

Mr Downer formally announced his retirement from federal politics, after 24 years in Parliament, yesterday.

The first indication of Mr Palmer's float ambition came with the news late yesterday that MEO had struck a strategic alliance with RDI that secures funding for the MEO's big-time methanol and liquefied natural gas ambitions.

Initially, Mr Palmer's Mineralogy will pump more than $20 million in to MEO in share and options issues at a premium to the market price, giving it about 9% of MEO.

Subject to the RDI float, RDI has also effectively undertaken to fund the majority of MEO's share of costs in up to nine wells in MEO's three offshore Western Australia permits to earn a 35% interest in each, reducing MEO to a 25% interest.

That would see RDI fund 80% of the cost of drilling the Zeus 1 exploration well near Woodside's Perseus gas field. The potential of Zeus is ranked at the "multi-trillion cubic feet" level. It is to be drilled in October

In MEO's Timor Sea project area, the deal with RDI would see it fund all of the appraisal drilling and project capital costs through to commercial production for the proposed Tassie Shoal gas-to-liquids projects, leaving MEO with a free-carried 20% interest in the $4 billion plan.

MEO has been in a trading halt pending last night's announcement after trading at 47.5¢