strategic cooperation with china railway

Strategic Cooperation with China Railway Materials
Commercial Corporation


Key Points

• Agreement reached on strategic iron ore focused cooperation between FerrAus
Limited and China Railway Materials Commercial Corporation (China Railway
Materials (CRM)). China Railway Materials (CRM) is a large-scale Chinese
state-owned enterprise whose major businesses are providing all materials for
the operation of railway systems and trading steel.

• China Railway Materials (CRM) (through its wholly owned subsidiary Union
Park Company Limited) to take a placement in FerrAus equal to 12% of the
fully diluted enlarged capital structure at the time of transaction completion.
Based on the current capital structure of FerrAus, the investment would be
approximately $12.6 million.

• FerrAus and China Railway Materials have agreed to cooperate in respect of
other potential iron ore resource opportunities in the eastern Pilbara region of
Western Australia that, together with FerrAus’ existing resources, can be used
to support the financing and construction of rail and port infrastructure
necessary for the development of the iron ore resources assembled.

• On a non binding basis, China Railway Materials (CRM) intends to assist
FerrAus with sourcing finance for the construction of Pilbara rail infrastructure
for iron ore exports.

• The parties are to discuss terms on which, in return for securing substantial
funding for the construction of suitable rail infrastructure, China Railway
Materials (CRM) will receive a substantial entitlement, at market terms to be
negotiated, for iron ore offtake.

• The cooperation with China Railway Materials (CRM) follows the placement of
a 9.9% shareholding in the Company to China Western Mining in mid 2008,
making it the second major Chinese investment in FerrAus.