Local billionaires are taking positions in iron ore explorers and projects across Western Australia.Hidden gems are starting to emerge at the small end of the iron ore industry thanks to the growing interest of billionaire investors with low-profile CZR Resources (ASX: CZR) shaping as the stock to watch.
Super-rich Gina Rinehart and Mark Creasy are leading the charge into small iron ore stocks as the price of the steel-making material refuses to fall as noted in last month’s report.
With the price of high-quality ore sitting around US$150 a tonne every iron ore producer in the world should be generating handsome profits and this is likely to continue for some time as Chinese steel demand rebounds and the war in Ukraine crimps exports from that country and Russia.
Rinehart’s deal with Hawthorn Resources (ASX: HAW) and Legacy Iron Ore (ASX: LCY), which involves the potential development of the Mt Bevan iron ore deposit located about 250 kilometres north of Kalgoorlie in WA, has boosted both small stocks.
Creasy’s control of CZR (formerly Coziron Resources) is yet to spark interest despite it owning a potentially valuable iron ore deposit immediately adjacent to an operating Rio Tinto (ASX: RIO) mine which creates a possible win/win situation – develop a mine itself or sell to Rio Tinto.
Mt Bevan attracts Rinehart’s interest
Hawthorn and Legacy started working with Rinehart’s master company Hancock Prospecting last year with the aim being to develop a project producing upgraded magnetite ore, which is enjoying revived interest at Asian steel mills.
Last week a three-way tie-up was agreed which sees Rinehart’s junior iron ore business, Atlas Iron, pay $9 million for a 30% stake in Mt Bevan, leaving Legacy (which is controlled by the government of India) with a 42% interest and Hawthorn with 18%.
Legacy’s share price initially doubled from $0.02 to $0.04 before settling back to around $0.027 at last trade. Hawthorn repeated the move, doubling from $0.07 to $0.14 before easing back to $0.11.
Ongoing work at Mt Bevan is expected to lead to a bankable feasibility study into the eventual production of a high-grade, low-impurity, magnetite concentrate.
