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Cazaly sees gold in iron ore project
Wednesday May 20, 2009, 6:24 pm

Cazaly Resources Ltd is considering selling its West Kalgoorlie gold project to fund its iron ore project near Southern Cross, also in Western Australia.

The company hopes the $70 million Parker Range iron ore project will become one of WA's next iron ore mines, after Atlas Iron Ltd's Wodgina project.

Cazaly aims to bring Parker Range into production by the end of calendar 2010.

The junior explorer's co-managing director Clive Jones said Cazaly's goal was in talks with "local" and "interested" parties regarding the gold project.

He said potential buyers included Focus Minerals Ltd, Dioro Exploration NL's suitor Avoca Resources Ltd and Kalgoorlie Consolidated Gold Mines, the Newmont/Barrick joint venture that operates the Super Pit gold mine in Kalgoorlie.

"It depends on how you monetise those (gold) resources - we could sell them outright," Mr Jones said.

" ... at the moment, we don't know where those cards are going to fall."

Mr Jones said all the potential suitors were seeking to add new gold resources to their projects in the area.

Cazaly is also in talks with overseas parties about a potential joint venture for Parker Range.

Shares in Cazaly jumped two cents, or 12.12 per cent, higher to 18.5 cents after the company announced a resource upgrade at its 80 per cent-owned Parker Range project to 23.5 million tonnes (Mt).

Mr Jones said the project was connected by road to the Kalgoorlie-to-Esperance rail network, so Cazaly had a strong infrastructure strategy including a memorandum of understanding with Esperance Port Authority.

The port handles up to 15 million tonnes per annum (Mtpa) but was currently operating at an 11Mtpa rate, "so there is capacity", he said.

The company was "deep in discussion" with AGR, which operates the railway, about transporting product from Parker Range to port, Mr Jones said.

He said it should be fairly easy to find a market for the ore.

Cazaly expects the capital expenditure estimate for Parker Range will fall, given early forecasts were made last year when costs were at an all-time high.

"It is fairly advanced and we've been doing a hell of a lot of work," he said.

Mr Jones said Fortescue Metals Group Ltd, which has been embroiled in several legal stoushes of late, was not shying away from backing Cazaly in its bid to wrest control of the Rhodes Ridge iron ore project from 50 per cent owner Rio Tinto Ltd.

Cazaly co-managing director Nathan McMahon said he expected a decision would be made on Rhodes Ridge "in the next couple of months".

In the meantime, Cazaly would "focus on the things in our control", namely Parker Range, a joint venture with Gondwana Resources Ltd.