The FIRB decision is unconditional and has cleared the way for China’s third-largest steel group to earn a 60% stake in the iron ore rights to five Centrex-owned tenements on South Australia’s southern Eyre Peninsula.
WISCO has gained approval from China’s National Development Reform Commission and is in the process of gaining approval from the State Department of Commerce.
The JV deal, first announced in December last year, will see WISCO take a direct equity stake of 15% in the enlarged capital of Adelaide-based Centrex for about $10.1 million and entitle WISCO to one seat on an expanded six-person board.
Over 40 million ordinary shares in Centrex will be placed with WISCO at 25c per share.
The placement will increase the number of Centrex shares on issue to around 309.7 million, capitalising Centrex at $198 million based on last night’s closing price of 64c.
WISCO will also inject up to $186 million directly into Centrex, with staged payments linked to the achievement of JORC inferred resource milestones progressing up to 2 billion tonnes.
Centrex chairman David Lindh said the WISCO deal meant Centrex would enter 2010 with a well-funded iron ore growth strategy with a strong foundation of existing contracts and commitments.
“Significantly, all of the cornerstones are now in place to rapidly escalate our iron ore growth on Eyre Peninsula into a billion dollar business with further and considerable multi-project development opportunities,” he said.
Centrex managing director Gerard Anderson told MiningNews.net that under the staged payment arrangements now cleared by FIRB, Centrex would have cash reserves of more than $67 million over the new few weeks.
“With WISCO sole funding the first $75 million in exploration and study costs, Centrex can complete the Wilgerup feasibility study in the knowledge that project funding is almost complete,” he said.
“That combination delivers a sound long-term cash and project funding capability for at least the next three years – an extraordinarily advanced position for a maiden iron ore exporter to be in.”
Anderson said Centrex expected to start significant exploration in the new year, particularly focusing on the Carrow prospect, with the intention of identifying the two best projects to quickly bring into operation.
In addition to the deal, Centrex and WISCO will also form a joint venture on a 50:50 basis to build a Capesize deepwater export port, north of Tumby Bay, at Centrex’s wholly owned Sheep Hill.
“This may prove to be South Australia’s first Cape-capable bulk commodities port,” Anderson said.
Shares in Centrex gained 2.5c or 3.9% to 66.5c this morning.
