December 02, 2008

Baotou to fund exploration at Centrex Eyre Peninsula iron ore deposits

It is reported that Centrex Metals has signed a deal worth up to USD 40 million to develop one of its Eyre Peninsula iron ore deposits. Under the agreement, Baotou Iron and Steel will spend up to USD 40 million to progress
In return for its investment Baotou will earn half of Bungalow's expected total annual production of 3 million tonnes of magnetite concentrate. It will spend USD 8 million on the project over the next year, which will take it to a 10% stake. A further USD 8 million will take it to 20% with a final USD 24 million to cover the cost of a BFS, bringing it up to 50%.

Baotou already has a 10.13% stake in Centrex and has agreed to take one million tonnes of hematite ore for five years from Centrex's neighbouring Wilgerup iron ore project due for production start up next year.