Parker Range gets dusted off as iron ore’s for­tunes rise

The West Australian - - WESTBUSINE­SS - STU­ART MCKIN­NON

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.

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