August 22, 2008

Murchison signs MoU with WestNet Rail to develop rail link

It is reported that iron ore miner Murchison Metals Limited has signed a MoU with Babcock & Brown Limited subsidiary WestNet Rail to investigate integration of WestNet's existing rail network with Murchison's proposed rail link to planned iron ore mines.

Under the MOU, WestNet Rail and Murchison will jointly investigate the integration of the existing narrow gauge rail network from Geraldton to Mullewa with the new northern corridor standard gauge rail line proposed to be constructed between Oakajee and Jack Hills and Weld Range. This work will include examination of a number of detailed rail network integration issues including a proposal for the network to access Oakajee along a common rail corridor.

The agreement provides that Murchison and WestNet Rail will work together to consider a wide range of detailed rail integration issues including environmental approvals, heritage and Native Title issues, land acquisition, the rail route, rail gauge, tonnage capacity, axle load options, rolling stock configuration, rail construction approvals, capital and operating costs, design standards, loading & unloading rates and commercial models for track ownership and access.

Mr Trevor Matthews MD of Murchison said that "As the Western Australia government have made clear to industry, any plans to develop new rail and port infrastructure in the Mid West region must meet the needs of multiple users and provide benefits for the Mid West region as a whole. We believe that by working closely with WestNet Rail, the existing Mid West rail owner, we can ensure the development of a first class integrated infrastructure network for the Mid West."

Mr Trevor added that "Importantly, we believe there are significant operational synergies between the existing WestNet Rail network and our proposal to develop a new northern corridor rail line to serve the bulk tonnage requirements of the new mines being developed at Jack Hills, Weld Range and elsewhere to the north east of Geraldton. By working closely with WestNet Rail, we believe we will avoid duplicating infrastructure that is already in existence and provide a superior regional rail infrastructure solution for the benefit of all Mid West rail users. We look forward to working with WestNet Rail to develop this integrated proposal for the Mid West region."

Mr John Cleland CEO of WestNet Rail said that the signing of the MoU with Murchison was consistent with WestNet Rail's desire to link all projects in the Mid West region to the existing WestNet Rail network and the proposed Port of Oakajee. He added that "We are delighted to sign this MOU to agree to work with Murchison on the rail network integration."

Mr Cleland added that "WestNet Rail has been a strong advocate of merging the proposed rail links from Jack Hills and Weld Range and further east with the existing rail link from the south through an integrated Mid West rail network that will meet the transport requirements of the projects in the region. Integral to the proposed WestNet Rail infrastructure solution is the volume economies achieved through the merging of iron ore volumes from throughout the region on a single rail corridor and a substantially reduced land acquisition requirement. WestNet Rail views this MOU with Murchison as an important step towards realizing our ambition of an integrated rail network for the Mid West region in the shortest time frame."

WestNet operates 5,100 kilometers of standard, narrow and dual gauge rail network across Western Australia, while Murchison owns the Jack Hills iron ore project and recently signed an agreement with Japan's Mitsubishi Development Private Limited to develop new rail and port infrastructure in the Mid West.