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Centrex Metals, WISCO Sign Formal Agreements
= Governmental approval only needed, being expected by August this year =
Australian Centrex Metals announced July 21 that the Company and China's Wuhan Iron & Steel (group) Corporation (WISCO) have signed formal transaction agreements that formalize the terms and conditions of the magnetite joint venture between the two groups.

Under the agreements,

A. WISCO to pay Centrex a total of up to A$186 million for a 60% equity in the joint venture (minimum payable A$78 million)

B. WISCO to sole fund the first A$75 million of Work Commitments into the joint venture to cover exploration and study costs.

C. WISCO to additionally invest in Centrex via a share placement of 40,399,599 shares at A$0.25/share to raise further A$10.09 million as agreed in the Heads of Agreement dated December 18, 2008.

Finalization of the joint venture agreements now only needs formal approval by governmental authorities, which is expected by August 2009.

The joint venture plans to develop two, 5-Mt/a magnetite iron ore projects from magnetite deposits north of Port Lincoln on the foot of South Australia's Eyre Peninsula. The two mines are expected to come on line over the next five to seven years. Centrex and WISCO have agreed to form a 50: 50 joint venture for the purpose of developing a deepwater port facility at Sheep Hill.

The progressive cash injections into Centrex by WISCO will also fully fund Centrex's commitments to commission its wholly-owned and advanced Wilgerup hematite iron ore mine - further north of the Centrex-WISCO JV projects. The Wilgerup project already has mining approval and is awaiting South Australian Government development approval to export hematite from Port Lincoln, with mining expected to commence before year's end.

WISCO is composed of the three steel companies of Wuhan, Echeng and Kunming. In 2008 the group's crude steel production totaled 27.73 Mt, being ranked third in China. WISCO's operations are undertaken in Hubei province centering on blast furnace-based integrated processes, as well as mining and pelletizing upstream. The group has established Wuliu Company by consolidating Liuzhou Iron and Steel, aiming to implement a project to construct Fangchenggang steelworks capable of producing 10 Mt/a of crude steel, at Fangchenggang port in Guangxi Zhuangzu Autonomous Region near the Vietnamese border. WISCO is aggressively seeking to secure its interests in iron ore resources both domestically and abroad. Overseas, it is deploying relevant activities in Australia, Brazil, Cambodia and Madagascar in search of resources development and/or acquisition of interest.
last modified : Mon 27 Jul, 2009 [10:30]
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