Parker Range gets dusted off as iron ore’s fortunes rise
Cazaly Resources has pencilled in a deal to sell its long-stalled Parker Range iron ore project, amid signs of life at the junior end of the iron ore sector.
The Nathan McMahon-led company announced yesterday it had drafted an agreement to sell the project in the Yilgarn region near Marvel Loch to Yuzheng Xie’s Gold Valley Group for $13 million plus a royalty.
Parker Range is considered the deposit closest to development in the region, with full State environmental approval to develop the 4.2 million-tonne-ayear direct-shipping ore proposal until 2022.
Th economics of Parker Ridge have improved because of surging iron ore prices and excess capacity at the port of Esperance after Mineral Resources restarted mining at Koolyanobbing late last year, shipping ore at half the annual rate of its predecessor Cleveland-Cliffs.
Iron ore was trading at $US100.30 per tonne yesterday for benchmark 62 per cent fines product while deep discounts for lower-grade ore like that from Parker Range have narrowed sharply in recent times.
The ore body is very low in the deleterious element phosphorus.
The deal provides for $5 million up front and a further $8 million when production begins. Cazaly will be also paid a royalty of between 50¢ and $1 a tonne.
Mr McMahon said the agreement realised some immediate value from Parker Range in an iron ore market that had recently shown signs of recovery.
“The people we dealt with have very good mining experience, they’ve got a stronger balance sheet, they’ve got marketing experience, so overall it’s a very good fit,” he said.