Adelaide, July 18, 2006 AEST (ABN Newswire) - South Australia's newest iron ore explorer, Centrex Metals Limited, has reached agreement to negotiate with a major Chinese steel producer for a multi-million dollar supply arrangement on development of its first mine on Eyre Peninsula.
The Chairman of Centrex, Mr David Lindh, said today that Shenyang Orient Iron & Steel Group had invested A$3 million and would be a major foundation shareholder with an initial 7.8% stake in the company.
The Adelaide-based Centrex will list on the Australian Stock Exchange tomorrow (Wednesday 19 July) after raising $8 million in a recent Initial Public Offer and plans to commence drilling at its Wilgerup iron ore deposit on Eyre Peninsula within weeks.
Centrex Managing Director, Mr Gerard Anderson, said the company was delighted to welcome the Shenyang Orient group as a major investor and business partner.
"Centrex and the Shenyang Orient group have agreed in principle for the sale of the first one million tonnes of hematite per annum for five years from its Wilgerup hematite deposit with the price being the long-term contract benchmark price," Mr Anderson said. The two companies are currently negotiating the more detailed terms relating to shipping schedules and marketing.
"At current iron ore prices for comparable product, such a supply arrangement - which would represent around half of the output of the mine - would generate revenue of about $78 million a year," he said.
Mr Anderson said that, subject to further successful drilling to determine the iron ore resource and a positive bankable feasibility study, Centrex's target for first production of iron ore from a mine development at Wilgerup was 2008.
"Unlike many other new iron ore plays in Australia, our hematite and magnetite deposits and prospects are located near major road and rail networks and close to either the deep port of Port Lincoln or near deep water sites along the east coast of Eyre Peninsula.
"Converting exploration success to production outcomes will not be accompanied by the high infrastructure costs confronting many other new participants in this sector."
Mr Anderson emphasised that the in-principle agreement is based on the Company demonstrating sufficient reserves at Wilgerup to support the agreement.
Centrex, formerly a private iron ore development company, has already expended over $2.3 million to take many of the Eyre Peninsula projects to an advanced exploration stage.
Centrex Metals' tenements cover over 2,000 square kilometres of prospective iron ore tenements stretching from near Port Lincoln on the southeast coast, to central Eyre Peninsula and north to the Western Middleback Ranges.
Mr Anderson said the Company would spend a minimum of A$2.4 million on exploration and development work on the Eyre Peninsula tenements within the next 12 months.
Project summaries
Centrex Metals' projects include the Greenpatch, Bald Hill, Iron Mount, Carrow, Wilgerup, Cockabidnie, Bungalow and Stony Hill targets - with the hematite focus on Wilgerup.
Located 30 kilometres southeast of Lock, Wilgerup has an Inferred hematite resource of 7.9 million tonnes grading 59.8% Fe. The deposit's northern pod is open along strike.
"There are some 30 interpreted hematite targets in the immediate Wilgerup area as defined from aeromagnetics and gravity surveys. The top six of these targets aggregate to over 6 kilometres in prospective strike," Mr Anderson said.
"The Company also has several potentially significant magnetite deposits including the Carrow and Bungalow deposits and the Bald Hill prospect. Drilling of the magnetite deposits will be undertaken in conjunction with the Wilgerup hematite drilling to define the best deposit for early mine development," Mr Anderson said.
Directors of Centrex include Chairman, Mr David Lindh, Mr Norton Jackson and Mr David Klingberg.
About Shenyang Orient Iron & Steel
Shenyang Orient Iron & Steel Co Ltd is a privately owned fully integrated medium-sized steel producer with its main production facilities located in Shenyang City, Liao Ning Province and Jixi City, Heilongjiang Province in China. The company has over 10,000 employees.
Shenyang has its own iron ore mines and has coal mines, coke ovens, a sintering plant, a pig iron plant and steel making and rolling facilities. Shenyang Orient produces 2 million tons crude steel per annum but is expanding capacity to 3 million tons by early 2007. Shenyang Orient's main products are pig iron, steel billets, strip steel and metallurgical grade coke.
MEDIA NOTE:
Centrex Metals Limited will list on the Australian Stock Exchange at 11.00am, Wednesday, 19 July 2006.
The media are invited to attend the listing ceremony to be held at 10.45am at Level 1, 89 King William Street, Adelaide.
Contact
Gerard Anderson
Managing Director
Centrex Metals Limited
Mob: 0404 672 393
Peter Gill
Field Public Relations
Tel: (08) 8234 9555
Mob: 0417 784 059
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