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Source: ttp://finance.ninemsn.com.au/newsbusiness/aap/8306727/murchison-narrows-loss-reduces-port-work



Murchison Metals has narrowed its full year net loss after stronger iron ore prices boosted sales revenue, and has scaled back activities at its troubled Oakajee port project in Western Australia's Mid West.

Sales revenue was up 38 per cent at $228 million after iron ore prices increased from $94 a tonne in 2009/10 to $143 per tonne.

The lift in prices offset a 10 per cent reduction in sales volumes due to adverse weather conditions in the March quarter.

Murchison said the net loss reflected the company's continued focus on feasibility studies for Oakajee and an expansion of its Jack Hills mine - projects that are on rocky ground as its cash reserves dwindle and an April debt refinancing deadline approaches.

Murchison has conceded it does not have enough money to fund its share of the near $6 billion port, which is one of Australia's biggest planned infrastructure projects.

Murchison said it was scaling back spending and short-term work programs for Oakajee and the Jack Hills expansion, while a solution was being sought for various commercial woes.

The Perth-based company and its Japanese joint venture partner, Mitsubishi, have not been able to secure foundation customers for Oakajee and are evaluating several options to bring them on board.

Would-be Oakajee foundation customer Sinosteel in June mothballed its $2 billion Weld Range iron ore project in the Mid West region, casting a cloud over the future of planned port.

Murchison says options to secure customers range from revised tariff models to a broader restructure of the joint venture.

WA Premier Colin Barnett this week returned from a trip to China, where he encouraged Chinese involvement in Oakajee, but said the matter was still being debated.

Mr Barnett also said China was still unhappy about missing out on the original tender process for Oakajee.

Murchison managing director Greg Martin in July said the miner would consider all options to fund Oakajee, including selling the Jack Hills iron ore project.

"The strategic review is ongoing and Murchison is currently engaged in confidential and incomplete discussions with a number of parties," the company said on Wednesday in a statement.

"There can be no assurances that a transaction will emerge which is either capable of being recommended to shareholders or otherwise enacted by the company."

Shares in Murchison were down half a cent at 54 cents at 1405 AEST.