daytrade diaries... february 8, page-77

This from the MHM thread, well worth a read. MHM should rally this week.

MANUFACTURER EYES TASSIE SILICA
Paydirt February 2010
By Mark Andrews

Tasmania is on the cusp of securing a multi-million dollar deal believed to be with German silicon manufacturer Wacker Chemie Ag.

The proposed transaction is said to be worth $500 million in which Wacker would build a silicon refinery at Port Latta on Tasmania's north-west coast.

When Paydirt went to print, Tasmanian Minister for Economic Development Michael Aird confirmed a decision was on the horizon by an unnamed company.

"Tasmania remains well positioned to secure a potential investment worth hundreds of millions of dollars and hundreds of jobs in the north-west of the State.

"The proponents are continuing their deliberations and a decision is expected soon," he said.

When contacted by Paydirt, a Wacker spokesman declined to comment on the silica smelter project.

Wacker, a multinational company with operations in five continents, had been supplied with silica samples from Macquarie Harbour Mining Ltd recently and the high quality results returned could be the tonic for what would be Australia's largest silicon refinery to go ahead.

Macquarie director Ben Mead said the samples provided to Wacker were deemed pure and suitable for the production of silica metal.

Mead said there were very low contaminants such as iron, aluminium and titanium. "The samples we have tested have shown these contaminants are significantly below the cut-off levels, so that is very positive," he said.

"We are still awaiting further feedback about developments, reported in the Tasmanian media, that a decision would be expected at some time at the end of January or beginning of February."

If the deal came to fruition as Mead expected, due to strong Federal and State Government support for the project, Macquarie would seek a long term off-take agreement with Wacker and other possible partners.

The silica would be sourced from the Marrawah (north-west Tasmania) and Maydena (west of Hobart) project areas. Macquarie also has the Sorell silica project (previously owned by Comalco) in its stable which it has scheduled to drill in the first quarter of 2010 to confirm tonnage and grade.

The company's silica ambitions would ultimately open the door for it to self-fund its copper, gold, nickel and iron ore exploration interests in Australia and push the company forward.

Macquarie listed on the ASX two years ago.

In addition to its mineral interests, Macquarie has an aluminium processing project in Victoria, acquired from Sims Aluminium Ltd last year, which is close to production. Mead said the aluminium project would bolster Macquarie's cash reserves and improve the chance of a union with Wacker, which is a world leader in silicon based products in the form of silicon wafers for semi-conductors used to make computer chips and other products.

Refined silicon can also be used to make LCD screens and in the making of fibre optic
cables to carry high-speed broadband telecommunications.

"Most certainly it has significant potential for the company, we're talking about looking at long term off-take agreements which for a company of our size is certainly desirable. We feel very positive about the potential of a silicon sponsor in Tasmania," Mead said.

Mead added the demand for modern technology was the seed for growth in the silicon sector and with only one other similar silicon smelter operating in Australia - Simcoa Operations Pty Ltd's plant at Kemerton, 160km south of Perth - there was much upside to the proposed project at Port Latta.

Should the project proceed, it would sit next to Grange Resources Ltd's pelletising facilities at Port Latta which is fed by its Savage River magnetite operation, 100km south-west of Burnie.

Though Port Latta has been bandied as the possible location for Wacker's silicon smelter, Grange's managing director Russell Clark suggested there were other sites being looked at.
This is despite the Tasmanian Government allocating and encouraging the use of a large amount of industrial space in the Port Latta region.

"I'm aware that the Government has been in discussions with a silicon production company and that Port Latta is one of a number of possible sites being looked at," Clark said.

"If it did occur, there would be the opportunity to share the existing infrastructure but we have not been in any discussions with the company about that," he said.

Clark said the proposed project by Wacker, which has kept hush on the developments since news broke in September last year, would not interfere with Grange's operations.

Local media outlets have reported Wacker visited Tasmania, where silica is believed to be 99% pure and untapped in some parts, several times last year meeting with Tasmanian officials and Federal Industry Minister Kim Carr.