statement

Liberals wade into Cazaly claim row

CATIE LOW


State Opposition Leader Paul Omodei joined Cazaly Resources yesterday in demanding Resources Minister John Bowler disclose the reasons behind his controversial decision to hand back the disputed Shovelanna iron ore deposit to mining giant Rio Tinto.

With Cazaly shares expected to be savaged today, Mr Omodei said the Government had taken far too long to make a ruling and it needed to explain why returning the Pilbara resource to Rio Tinto was in the public interest. "There are a lot of people in the community that aren't happy about that decision but I want to know why, on what grounds has John Bowler made that decision," Mr Omodei said.

With Cazaly and the WA Government apparently on a collision course for legal action, the State's junior explorers have decried the decision, claiming it will do serious damage to the State's exploration sector.

Mr Bowler maintained his silence on the issue yesterday.

Cazaly pegged the Shovelanna deposit, near Newman, in August after Rio Tinto failed to meet the deadline to renew its lease. Rio lobbied the State Government to have the lease returned, arguing it would not be in the public's interest to hand it to a small company lacking the financial or technical clout to develop it.

Cazaly secured a funding deal with merchant bank Investec, confirmed a resource of more than 200 million tonnes and struck a deal to supply up to five million tonnes of ore annually to BHP Billiton, which is already mining the adjoining Orebody 18 deposit.

Cazaly's share price rocketed from 30¢ to a high of $2.30 last month. It closed at $2.12 on Friday.

A number of parties are already understood to have offered financial support to fund any legal action by Cazaly but managing director Nathan McMahon said it was too early to be talking about a fighting fund or whether BHP Billiton would play a role.

"Right now what we have is a three-line comment from the Government that doesn't talk about anything," Mr McMahon said. "This has got the smell of big business about it and the WA public should be able to get a reason."

Fellow iron ore junior Atlas Gold said it was difficult to see how Cazaly's plan to develop Shovelanna in partnership with BHP Billiton was not in the best interests of the State. Managing director David Flanagan said one of the key issues was the timing of the development of the Shovelanna deposit, which Rio Tinto had left virtually untouched for two decades.

"If it's going to be done in the best interests of the State it needs to be done in the current commodity boom," Mr Flanagan said.

Association of Mining and Exploration Companies chief executive Justin Walawski said the Government's decision had the capacity to undermine investment in mineral exploration in WA.

But former Portman boss George Jones said he had expected the Government would find in Rio's favour, particularly as it had paid for the lease and sent off its renewal