Ferret s Stock to Watch: AUSTRALASIAN RESOURCES LIMITED CHINESE...

Ferret s Stock to Watch: AUSTRALASIAN RESOURCES LIMITED


CHINESE FINANCING/TECHNICAL GROUP SETS UP OFFICE IN PERTH

Sydney - Monday - August 27: (RWE Aust Business News)
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OVERVIEW
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Australasian Resources Ltd (ASX:ARH) has been encouraged by the
interest shown from the Chinese government-owned Export Import (EXIM)
Bank for its development and support of the company's Balmoral South
iron ore project.
Directors reported on Friday to the ASX that the the project,
located in the Pilbara region of Western Australia, moved closer to
financing and development with the visit of an executive financing team
from EXIM Bank to the company during the week.
Senior EXIM Bank representatives, headed by the deputy general
manager of the Corporate Banking Department, Liu Zhenggui, spent the past
week in Perth in discussions with representatives of ARH and its
strategic partner, steel producer Shougang which is also owned by the
Chinese government.
These meetings were designed to assist EXIM Bank in pursuing the
undertaking of the financing of the project in accordance with the
commercial arrangements the company has agreed with Shougang Entities.
The EXIM Bank team members confirmed to Australasian Resources
managing director, Andrew Caruso, its interest in providing the necessary
project finance to allow the project to proceed to development.
The provision of any financing by the EXIM Bank would be in
accordance with the legal requirements of Shougang's decision to proceed
with full-scale project development.
Commenting on the status of discussions this week, Liu Zhenggui
said EXIM Bank is confident of the success and is supportive of the
development of the Balmoral South iron ore project.
Mr Caruso said the EXIM Bank's visit and support for the
company's project was as a result of an invitation issued by Shougang.
"Shougang has proven to be a very important partner towards the
development of the project," Mr Caruso said.
Mr Caruso revealed that Shougang was providing the company with
significant technical support, and last week established an office in
Perth, staffed with the necessary Shougang technical team to assist the
project.
Furthermore, the visit of the EXIM Bank at Shougang's invitation
further endorsed its vision to accelerate the development of the project,
Mr Caruso declared.
Established in 1994, EXIM Bank is China's leading international
credit bank, having executed numerous transactions in support of
resource, construction and infrastructure projects around the world.
International Minerals Pty Ltd (IM), a 100 per cent-owned
subsidiary of ARH, executed a landmark project agreement with Shougang
Entities in March to complete studies suitable for the financing and
development of the Balmoral South iron ore project.
Shougang Entities will earn a 50 per cent-interest in the share
capital of IM by:
* Providing finance for 100 per cent of the project funding
(estimated at $US2.1 billion) through an interest-free project loan; and
* Purchasing 100 per cent of iron ore products over 25 years from
the project.

SHARE PRICE MOVEMENTS
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Shares of ARH on Friday rose 7c to $1.40. Rolling high for the
year is $2.30 and low 85c. The company has 131 million shares on issue
with a market cap of $183.4 million.
The establishment of the Shougang office in Perth precedes the
visit of Chinese President, Hu Jintao, next week.
The company is looking forward to advancing the project with
Shougang and discussing its enormous potential for the Chinese market
with the Chinese President should the occasion arise.
Shougang Entities currently import over 20 million tonnes of iron
ore into China for use in their steelmaking facilities and are in the
process of developing a substantial new integrated steelmaking facility
at Tangshan, on the northern China coast.
Construction at Tangshan has commenced and will produce close to
10Mt of steel a year starting in 2010.
The principal Shougang Entity that is party to the project
agreement is Shougang Holding (Hong Kong) Ltd, which is 100 per
cent-owned by Shougang Corporation.
International Minerals executed a landmark project agreement with
Shougang Entities in March to complete studies suitable for the financing
and development of the Balmoral South iron ore project.

BACKGROUND
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Australasian Resources Ltd (formerly Sherlock Bay Nickel
Corporation Ltd) is a minerals exploration company with projects covering
iron ore, gold and nickel located in the Pilbara and regions near
Kalgoorlie and Norseman in WA.
ARH's main focus is the Balmoral South iron ore project.
Another key project is the Sherlock Bay nickel/copper project.
In addition, the company at the end of 2005, made an agreement
with Mineralogy Pty Ltd for the exclusive right to purchase the Cane
River project.
Mineralogy is the owner of the Balmoral iron ore deposit, reputed
to be the largest undeveloped magnetite project in the world.
Mineralogy's project has the benefit of having environmental
approval and a Western Australian Act of Parliament which was passed by
the Western Australian Parliament in 2002.
Sherlock's acquisition of the Cane River project was consistent
with the Board policy announced earlier this week whereby Sherlock would
concentrate on energy and iron ore projects which will benefit from the
continuing and future growth in China.
Cane River holds the right to mine 400Mt of magnetite ore from
granted mining leases on the Balmoral Southern Block magnetite deposit,
which is situated 40km from Mineralogy's proposed port at Cape Preston,
80km west of Karratha.
Furthermore it holds the rights to 100 per cent of the iron ore
on the Cane River tenement, which is located approximately 150km south of
the Balmoral Southern Block.
The Cane River project plans to produce a direct shipping iron
ore sinter feed product of plus 60pc Fe consisting of a blend of two
parts of Cane River pisolite and one part high-grade magnetite
concentrate (71pc Fe) from the Balmoral Southern Block, for a total
production rate of 15.5Mtpa.
Mineralogy has previously blended Balmoral Central Block ore
concentrate and iron ore from a deposit owned by Fortescue Metals Group.
Testing of the blended product was completed by the
internationally recognised testing facility of SGA in Germany and
produced excellent results.
Details of the Cane River project include:
* Production rate of 15.5 million tonnes of sinter feed per year;
* Located 40km from the coast and 80km south of Karratha;
* Adjacent to the Karratha-Bunbury gas pipeline enabling low
energy costs;
* Construction of a short light-gauge 150km rail line from the
Cane River deposit to the coast, keeping capital costs low;
* The early capital and operating cost studies suggest a project
with a capital cost of under $US1 billion and after-tax profit in excess
of $200 million per annum;
* Access to the proposed environmentally approved deep water port
at Cape Preston;
* Guaranteed magnetite resources with the potential for
significant expansion at Cane River;
* Leverage from Mineralogy's advanced feasibility work, which
supports rapid development of the Cane River project with construction
targeted for late 2007; and
* Benefitting from Mineralogy's excellent reputation and
established network of contacts in the China market which has been
developed over a period of 20 years.
ENDS