UPDATE: Murchison Says Jack Hills Project Significantly Larger
September 03 2009 - 1:12AM
Dow Jones News
Murchison Metals Ltd. (MMX.AU) said Thursday early drilling
results indicate its 50%-owned Jack Hills project in Western
Australia state could have an iron ore resource up to double its
current certified size.
Murchison said in a statement that if realized, new exploration
target volumes at the project would increase the resource to 1.5
billion-2.1 billion metric tons of iron ore from an upgraded
resource in February of 991 million metric tons.
To put that in some perspective, in the year to June 30 BHP
Billiton Ltd. produced 114.4 million metric tons of iron ore,
although the quality of its ore could differ from Murchison's.
"We look forward to the resource upgrade later in the year as
the drilling program and studies progress," Murchison Executive
Chairman Paul Kopejtka said in a statement.
A $23 million exploration program involving 12 drilling rigs
commenced at Jack Hills in April.
Any resource upgrade will add to Murchison's attractiveness as a
potential takeover target, with the company having already received
approaches from possible Chinese investors.
By 0435 GMT, Murchison shares were up 8.1% at A$1.935 compared
to a 0.2% rise in the broader market.
Murchison said in July it had "positive discussions" with
Chinese groups interested in assisting in the development of the
Oakajee port and rail venture in WA, of which it also owns 50%.
The development prompted speculation Sinosteel, which bought
rival WA miner Midwest Corp. last year, could consider a fresh move
on Murchison.
The Australian government, however, last September limited any
Sinosteel investment in Murchison to 49.9%. Japan's Mitsubishi
Corp. owns the other half of Jack Hills and the Oakajee port and
rail venture.
In the company's statement, Kopejtka said the focus in recent
months has been on the Oakajee project, given its "pivotal role in
unlocking value for midwest miners and shareholders, such as
Chinese groups, that have invested more than A$2.5 billion in
midwest mining companies and mining projects."
"However, these latest results from Jack Hills underline the
enduring importance and value of this major project, which is
developing into potentially the largest iron ore project in the
midwest region."
Kopejtka and Murchison Managing Director Trevor Matthews are
currently traveling and couldn't be reached for immediate
comment.
-By Ross Kelly, Dow Jones Newswires; 61-2-8235-2957;
ross.kelly@dowjones.com