Perth junior Groote Resources is about to gatecrash BHP Billiton's stranglehold on the hugely-profitable world of manganese mining on Groote Eylandt with the award of five exploration licences around the remote Gulf of Carpentaria island.
Groote placed its shares, at 73, in a trading halt yesterday pending an announcement about the status of the Groote Eylandt exploration licences.
It is understood that Groote, having acquired the company which held the five exploration licence applications last November, has now been informed by the Northern Territory Government that the permits have been awarded.
The award is expected to trigger the immediate start of exploration by Groote, initially on the offshore licences in shallow waters around Groote Eylandt while a land access deal with native title groups for nearby Winchelsea Island is negotiated.
Groote would not comment on the status of its licences yesterday.
But BHP is likely to be furious that extensive lobbying to the NT Government to oppose Groote's licence applications has failed.
BHP made clear its displeasure at Groote's initial move into the area in November by immediately lodging exploration licence applications surrounding its upstart's target areas. In the process, BHP also gave credence to Groote's ambitious proposal to dredge manganese off the seabed surrounding Groote Eylandt.
BHP has been mining manganese, a metal used to strengthen steel, on Groote Eylandt since the mid-1960s -- it is one of the global mining giant's most profitable ventures.
BHP's underlying manganese earnings before interest and tax, dominated by the Groote Eylandt venture's contribution, were $US1.3 billion ($1.5 billion) in 2008-09 although the result for the year to June 30 is expected to be significantly lower because of the global financial crisis-triggered collapse in metal prices.
The Groote Eylandt venture, owned 60 per cent by BHP and 40 per cent by Anglo American, contributes 15 per cent of global high-grade manganese supply and is about three times the size of Consolidated Minerals' Woodie Woodie asset in the Pilbara and OM Holdings' Bootu Creek mine in the NT.
The prospect of tapping into such manganese riches has sent Groote's shares from less than 9 just before it announced the acquisition of the exploration licence applications in November to $1.20 in March.
GOT Price at posting:
73.0¢ Sentiment: ST Buy Disclosure: Held
