Here is an article from the AGE, Barry Fitzgerald.'...IT HAS...

Here is an article from the AGE, Barry Fitzgerald.

'...IT HAS been more than 10 years in the making but Gunson Resources finally looks to be on its way to becoming a mineral sands producer from a planned $180 million development of its Coburn project in Western Australia.

Gunson yesterday revealed that a ''major east Asian'' industrial group was planning to earn a ''large minority joint venture interest'' in Coburn by funding its share of development costs, as well as making an ''additional contribution that reflects a project earn-in value well in excess of the company's current market capitalisation [$33 million]''.

The reason for the secrecy is that the incoming party - believed to be a Korean group - wants it that way until its agreement becomes binding, now the subject of a three-month due diligence process.

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It is believed the Korean group is planning to earn a 40 per cent interest in Coburn. It is envisaged that the Korean group will also help Gunson raise its share of project debt and equity finance.

A long-term lack of investment in mineral sands projects at a time of rising demand from China and elsewhere has put a rocket under prices.

Gunson said it had now stepped up negotiations for offtake contracts covering what is believed will be its remaining 60 per cent share of Coburn's production.

Despite revealing that the all-up value of the deal would be more than its market value, Gunson shares were held yesterday to a 1¢ gain to 17¢ a share.

Analysts said that apart from the general market weakness, the lacklustre response was because of the extended due diligence period and a lack of detail on the deal.

Gunson said that financial modelling of Coburn using updated mineral sands prices yielded a net present value for Coburn of $223.7 million and an internal rate of return of 28.3 per cent on a pre-tax and pre-funding basis.