proposal to the company, page-8

Pallinghurst tries again in Australia
Brendan Ryan
Posted: Wed, 22 Oct 2008
[miningmx.com] -- PALLINGHURST Resources (Pallinghurst) intends getting its proposed Australian iron ore ventures up and running through a deal with ASX-listed base metal junior Jupiter Mines.


The focus of the initiative is on developing new iron ore mines in the Central Yilgarn region of Western Australia.

This is located just north of the gold mining centre of Kalgoorlie and thousands of kilometres south of the Pilbara region in the north-west of Western Australia where BHP Billiton and Rio Tinto have their established iron ore mines.

Pallinghurst CEO Arne Frandsen commented, “we believe there is an iron ore play in the Central Yilgarn where you can pick up opportunities as good as those in the Pilbara but at a fraction of the price. We think it is the next area where something is going to happen in iron ore.“

According to a statement released to the ASX today by Jupiter, the company has been approached by Pallinghurst Resources Australia and Red Rock Resources Plc which are “seeking to vend certain assets into the company.”

Jupiter added, “the consideration for this would be an issue of shares which would be likely to lead to a change in control of the company. The board is currently giving the proposal careful consideration.”

Pallinghurst and Red Rock already have a foothold in Jupiter owning 19.4% between them according to Jupiter chairman Paul Murray.

This is Pallinghurst’s first major initiative in Australia since it lost the battle last year for control of Consolidated Minerals (Consmin) when it was outbid by Ukrainian company Palmary.

That turned out to be highly fortunate for Pallinghurst given the current global financial panic which has sent the share prices of junior mining companies tumbling.

Frandsen said Pallinghurst made a return of 150% on its money when it decided to stop bidding and sold the 11% stake it had build up in Consmin to Palmary.

“That was pure luck but we made the money in the bull market and now we can spend it in the bear market,” he commented.

Frandsen added current market conditions could speed up the overall consolidation trend in the mining sector which would help Pallinghurst.

“We would like to create one new entrant to the iron ore market instead of four or five. We have a number of assets in the Central Yilgarn that we would like to put into Jupiter.

“The size of stake we end up with in Jupiter will be a major one but we are not looking for control.


Click Here to subscribe to our daily newsletter“That is not important to us. We believe in the benefits of partnership and what we want is a big enough stake to have influence in the company.”

Jupiter is carrying out drilling programmes on a number of prospects in the Central Yilgarn, two of which it bought last year from Red Rock for A$250,000 in cash and the issue of 4.6m Jupiter shares as well as a 1.5% royalty on production.

Jupiter’s most advanced project is at Mt Mason where drilling has so far delineated a 2.2mt inferred resource of hematite iron ore at an average grade of 60.6% iron.

According to Murray, “results to date have shown that the outcrop of high-grade hematite at Mt Mason is a surface expression of a mineralised iron system that extends well to the north and into the neighbouring tenement known as Mt Bevan and to the south onto the company’s adjacent Mt Ida tenement where it occurs as both hematite pods and extensive magnetite mineralisation.

“This provides the company with considerable encouragement to accelerate its exploration programme at Central Yilgarn.”

Frandsen was unable to provide estimates of the size and cost of the iron ore mine that could eventually be built in the region which he said would be subject to a bankable feasibility study.

Asked about financing he pointed out that one of Pallinghurst partners in the venture was South Korean steel giant Posco.

“Raising project finance is a lot easier when you have a partner who is prepared to sign an offtake agreement – obviously negotiated at arm’s length,” he said.