Brockman Resources Ltd. (BRM), developing a A$2 billion ($2.1 billion) iron ore mine, said it’s well- positioned to be part of takeovers in the Pilbara region of Australia, the biggest exporter of the steelmaking material.
“We have one of the largest standalone projects in the Pilbara, outside of the majors,” Wayne Richards, managing director of Perth-based Brockman said in an interview with openbriefing.com, released on the Australian stock exchange. “We’re well positioned in the consolidation scenario.”
Atlas Iron Ltd. bought Giralia Resources NL for A$984 million in stock this year as iron ore developers seek to add scale and port allocations. Global steel production may rise 7 percent this year, spurred by demand in China and India, Ernst & Young LLP said in a May report.
Brockman fell 3 percent to A$3.20 at the 4:10 p.m. close of Sydney trading. The stock has fallen 35 percent since the start of the year.
Brockman, which is majority-owned by Wah Nam International Holdings Ltd. (159), is considering getting project financing from banks as well as choosing a joint venture project partner to help pay for construction costs. Brockman will update the market during the third quarter on these costs, Richards said.
“If we decide to go for a traditional combination of equity and debt, we’ll be looking to Wah Nam in Hong Kong, and its connections into the Asian financing markets and experience as corporate bankers, to support us,” Richards said. Funding should be completed by the second quarter next year, he said.
A record number of minerals and energy projects in Australia, the world’s biggest exporter of iron ore, coal and alumina, are at an advanced stage of development, leading to wage and construction materials inflation that have led to cost blowouts for projects.
Brockman has a port allocation of 18.5 million metric tons at Port Hedland in Western Australia and talks for rail access are “well advanced,” Richards said.
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