news release

Just out...news release

Right off the back of a landmark multi-billion dollar deal with China, Mining Entrepreneur Professor Clive F Palmer has consummated a second deal with Australasian Resources Ltd (ASX Code: ARH). According to Australasian’s Managing Director, Mr Darren Hedley, this deal has the potential, in the fullness of time, to match the recent CITIC Pacific transaction. Australasian’s deal with Professor Palmer see the acquisition of the right to mine 1 billion tonnes of magnetite iron ore from the “Southern Block” of Mineralogy’s Balmoral magnetite deposit in the Pilbara region of Western Australia. The agreement, which will see Professor Palmer become the major shareholder in ARH with 76%, is subject to approval by shareholders. Given the direct comparability of the CITIC Agreement with Australasian’s agreement with Professor Palmer, KPMG Corporate Finance (Aust) Pty Ltd estimated the implied value of the CITIC acquisition of the initial right to a defined resource of 1 billion tonnes of magnetite from the Balmoral deposit. Based on discounted cash flow methodology, KPMG estimated an implied value of A$1.18 billion at today’s prices. Managing Director of ARH, Mr Darren Hedley was understandably delighted that the deal was concluded, which he believes will “position Australasian Resources as a potential new producer of iron ore products to supply the growing demand from Asian steel producers”. NUMEROUS MERITS The merits of the Balmoral “Southern Block” project are numerous according to ARH, including the ability to produce very high quality products, significant capital and operating cost benefits afforded by the Project’s scale, coastal location, proximity to competitively priced natural gas, and the potential to share infrastructure with CITIC Pacific Ltd, who recently acquired the rights to mine up to 6 billion tonnes of magnetite from the “Central Block” of the Balmoral deposit. In addition, ARH confirmed they have the ability to fast track the Project feasibility and development as they will have access to the extensive feasibility work already completed by Mineralogy on the Central Block deposit. Hedley confirmed that “Australasian plans to commence a definitive feasibility study on the Project as soon as shareholder approval is received” and that it will “continue discussions with potential funding and off-take partners” for the Project. DUE DILIGENCE COMPLETED Based on due diligence work by ARH, including an engineering review study by ProMet Engineers Pty Ltd (ProMet), resource drilling and metallurgical test work, the project has an estimated gross operating margin of A$800M per annum for 25 years based on today’s iron ore prices.

Cheers

Doyle