It is reported that China's third largest steel company, Wuhan Iron & Steel, will invest up to AUD 189.7 million in South Australian iron ore projects owned by Centrex Metals. The deal, announced to the Australian Stock Exchange this morning, will give Wuhan Iron & Steel Group Co a 50% share in five Centrex projects in the Eyre Peninsula.

WISCO will also take a 15% stake in the company at a cost of AUD 9.7 million. Shares in Centrex Metals were down 2c or 11% to 20c.Centrex chairman

Under the agreement, WISCO will participate in the development of five projects in the southern part of Eyre Peninsula in the Port Lincoln - Tumby Bay region. The agreement is expected to be formalised by March next year, subject to government approvals.

As part of the buy in, the Chinese investment will see Centrex paid AUD 59.5 million cash once all necessary government consents and permits have been received. Centrex will receive a further AUD 30 million unconditional cash payment 12 months later. A non-refundable deposit of AUD 500,000 will be paid to Centrex by WISCO by the end of this month.

Mr David Lindh chairman of Wuhan said that the deal would allow the company to fund its mining and exploration developments in the Eyre Peninsula. He added that "This is a landmark, high integrity agreement... and is a company maker for us in every sense.”

Mr Lindh said that "The agreement also sets up a potential long-term relationship of substance that will significantly grow Centrex while evolving Eyre Peninsula as a genuine new contributor to Australia's iron ore export capability."