coal sale helps fund iron-ore jv in pilbara

Aquila coal sale helps fund iron-ore joint venture in Pilbara

BY: SARAH-JANE TASKER From: The Australian April 03, 2012 1:19PM

AQUILA Resources is in the box seat to develop a multi-user port at Anketell Point after firming up crucial funding with the $430 million sale of a key coal asset.

The Perth-based company announced today it had sold its 50 per cent interest in the Isaac Plains project in Queensland to Japan's Sumitomo, with the funds to go towards the development of the $5.8 billion West Pilbara iron ore joint venture.

Aquila, in a joint venture with private US group AMCI, is planning to develop iron ore deposits in Western Australia and construct a 285km railway from the mine, to a proposed multi-user port at Anketell Point.

Andrew Forrest's Fortescue Metals Group had contested Aquila's port plans and offered to spearhead development of the infrastructure, but Aquila needs it sooner than its rival was planning.

The two groups have indicated they are open to developing the infrastructure in a broadened joint venture.

Aquila executive chairman Tony Poli said securing funding for the project was a "real catalyst" for the state government to award the miner the right to develop the port and also for China Development Bank to finalise negotiations on the term sheet for the debt component of Aquila's share of the funding.

The miner plans to fund its share through a mix of around $1 billion in equity and the rest with debt, which is likely to be sourced from China Development Bank.

"I am very comfortable with the equity component and are now focussing on the debt component," he said.

"For us the sale is important because it helps shape Aquila going forward, which is going to be an iron ore company and coal company and it's major interest is going to be the West Pilbara and the interest in Eagle Downs (coal project), both world-class tier-one assets."

Brazilian giant Vale is the joint venture partner at Isaac Plains and has a pre-emptive right to match Sumitomo's offer.

Isaac Plains, in the Bowen Basin in central Queensland, has a production capacity of 2.8 million tonnes per annum, exported through the Dalrymple Bay Coal Terminal.