Home > Mystery Australian Oakajee port and rail investor to be revealed

Mystery Australian Oakajee port and rail investor to be revealed

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Padbury Mining has promised to reveal the mystery Australian backer of its $6 billion Oakajee rail and port project after a request from the ASX.

Last week the junior miner made a market announcement that the Western Australian project would go ahead after receiving massive financial funding.

Padbury said the $6 billion needed to build the port and rail infrastructure in the mid-west region had come from Australian private equity partners that want to remain anonymous.

It said a new private company called Midwest Infrastructure (MWI) will become a subsidiary of Padbury Mining and develop the rail and port project.

The private investor will take a 60 per cent stake in MWI and Padbury will hold a 30 per cent interest.

However the ASX has demanded answers after shares in Padbury rose 170 per cent after the announcement.

On Friday the junior said it was not ready to announce the investor but has since entered into a trading halt and told the market the name of the parties, details of any shareholder approvals and details of any security will be supplied by Tuesday.

Last year, Japanese firm Mitsubishi shelved plans to develop the project after it failed to attract Chinese investors and some are questioning if the deal is a viable one.

Securities investment advisor at Bell Potter, Giuliano Sala Tenna, said off-take agreements and further financial security was required.

"You know, there's been many parties that have tried to get this project up and to date and haven't been able to succeed,” Tenna told the ABC.

"Now we've got an iron ore junior here with a $67 million market cap, now the suggestion is they've secured $6 billion worth of funding.

"To get this up you're going to need some financing from some of the larger banks and for them to get involved they're going to need to see offtake agreements," he said.

Others say Padbury’s Peak Hill magnetite deposit is too small to support the project and want to see the updated studies the company has undertaken since it bought the intellectual property to develop the project in July 2011.

Despite the industry chatter, Padbury's managing director Gary Stokes said the announcement was legitimate.

“We wouldn’t have made an announcement on the ASX if it wasn’t,” he said. “We’ve been working on this for quite some time — this is not new,” he told The Australian.

“We have been very much about under-announcing and over-delivering. There is a lot of cynicism there — some of it healthy, some not so healthy.”

He said the company was not undertaking any ground breaking innovations that would act to stall the venture.

“All of the engineering advice we’ve had is that port and rail is fairly stock-standard stuff,” he said.

“There’s nothing too sophisticated about them from an engineering perspective."

 As for customers, Stokes says there are 21 companies in WA’s mid-west region that needed a port to export their resources from.

“Some of them are exporting (from Geraldton) but Geraldton is not going to be sustainable for them in the longer term,” Stokes explained.

“On a good day in Geraldton you can get a 66,000-tonne ship in. We’re taking about 240,000-tonne ships.”

Oakajee port will enable the export of 35-45 million tonnes of iron ore with Stokes calling it a “game changer for both Western Australia and the Midwest iron ore industry”.

Funding for the project will come in three tranches with the first delivering $US470 million ($501.2 million) to complete design and construction plans.

Padbury says it is working closely with large Asian engineering firms about final construction plans.

Image: perthnow.com.au

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