Billionaire Mark Creasy strikes third big Pilbara deal this month

Billionaire prospector Mark Creasy has agreed to sell iron ore aspirant CZR Resources to exporter Fenix Resources, marking the third West Australian iron ore buyout in the past month.

The entrepreneur turned to iron ore junior Fenix after an earlier $102 million deal to sell to Chinese-linked Miracle Iron Resources stumbled in front of the Foreign Investment Review Board.

The all-scrip deal with Fenix values CZR at $71 million and follows Fortescue’s $254 million takeover of Pilbara neighbour Red Hawk, and Japanese trading houseMitsui’s purchase of an $8.4 billion stakein Rio Tinto’s untapped Rhodes Ridge project.

Fenix Resources owns the Iron Ridge iron ore mine in the Weld Ranges, in West Australia.

The flurry of deals in WA’s iron ore sector is unusual, given the district is dominated by a small number of big producers.

But enhanced protections for Indigenous cultural heritage and biodiversity have made it harder to win permission for new mines in the Pilbara, prompting miners to buy iron ore projects from rivals rather than hunt for new resources.

CZR stock, which were 4 per cent higher at 24¢ on Tuesday, came under the ASX spotlight after spiking from 16.5c last Thursday. Fenix shares were down 6 per cent at 28¢.

The deal comes despite uncertainty around the key steel-making ingredient on the back of the wobbling Chinese property sector andBHP’s prediction that demand for the commodity had peaked.

The takeover will give Fenix access to CZR’s 85 per cent stake in the Robe Mesa. Creasy personally owns the remaining 15 per cent.

Robe Mesa is slated to produce 3.5 million tonnes of iron ore a year over its first four years of operation, with potential for that to rise to 5 million tonnes.

Former rugby union international and Fenix executive chairman John Welborn said the deal would be transformational for the junior miner.

“CZR’s Robe Mesa iron ore project is one of the last independent large-scale high-quality iron ore development assets in the Pilbara,” said Welborn. “This is a genuinely low-cost asset. What Robe Mesa allows us to do is transition to large-scale, low-cost assets.”

He is optimistic, countering bearish predictions for iron ore: “The market hasn’t woken up to the fact that iron ore is alive and well. The richest people in the country and the largest mining companies are built on it, and we’re really good at mining it.”

“There is a lot of activity in the sector. It’s driven by the scale of the worldwide seaborne iron ore market and its continuing resilience and the ability for particularly efficient Australian miners to make huge margins on what is a very liquid market and strong demand.”

Creasy controlled 53.15 per cent of CZR, according to the company’s last annual report. The legendary exploration geologist recommended CZR shareholders accept the deal, with no competing proposal on the table.

“The combined group will have significantly more liquidity and capacity to fund the development of Robe Mesa, reducing the impact of potential shareholder dilution,” he said.

CZR highlighted FIRB’s lack of approval for the deal with Miracle, 12 months since the takeover was first proposed.

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