West Perth-based Sphere Investments Ltd has issued a 13 per cent interest in the company to Saudi Iron and Steel Company - a wholly owned affiliate of Saudi Basic Industries Corporation.
West Perth-based Sphere Investments Ltd has issued a 13 per cent interest in the company to Saudi Iron and Steel Company - a wholly owned affiliate of Saudi Basic Industries Corporation.
Sphere will issue 10.3 million fully paid ordinary shares to Saudi Iron and Steel at an issue price of up to $1 and will use the $10.3 million in proceeds to part fund the cost of its current Stage 2B Bankable Feasibility Study on the Guelb el Aouj iron ore project in Mauritania.
Sphere currently has 69.9 million ordinary shares on issue, providing Saudi Iron and Steel with a 14.8 per cent interest. Once the issue is completed, Sphere will have a total of 80.25 million ordinary shares on issue, giving Saudi Iron and Steel an interest of 12.9 per cent.
The final study is due to be completed by the end of the first quarter 2007.
At 1140 WST, shares in Sphere had risen 6 cents to 97 cents.
In January, Sphere Investments said it would assess the exploration potential of its Bou Derga and Tintekrate magnetite deposits in Mauritania, after receiving positive early indications from a feasibility study at the nearby Guelb el Aouj iron ore project.
Sphere listed on the ASX in December 1986 and has a market capitalisation of $67.5 million.
Below is the full announcement:
The largest diversified industrial company in the Middle East has taken a strategic stake in an Australian company with iron ore interests in Mauritania, West Africa.
Perth-based Sphere Investments Ltd announced today that it had issued a 14.8% interest in the Company to Saudi Iron and Steel Company (HADEED) - a wholly owned affiliate of Saudi conglomerate, Saudi Basic Industries Corporation (SABIC).
It is the first move by a key Middle East steel company to secure a direct interest in an emerging iron ore producer in the region - reflecting, Sphere says, an increasing trend by steel mills globally to secure future supplies.
Sphere (ASX "SPH") is well advanced in earning a 50% interest in an iron ore precinct in the West African country of Mauritania, with joint venture partner, Societe Nationale et Miniere (SNIM) of Mauritania. The precinct includes the advanced Guelb el Aouj project.
"Sphere and SNIM recognise the significance of HADEED's future involvement in the development of the Guelb el Aouj project. This is a strategic investment for both parties and a milestone in Sphere's growth," Sphere's Managing Director, Mr Alex Burns, said today.
Terms of the share placement
Under the terms of the agreement announced today, Sphere will issue 10.3 million fully paid ordinary shares to HADEED at an issue price of up to A$1.00 per share.
The $10.3 million in proceeds will be used by Sphere to part fund the cost of its current Stage 2B Bankable Feasibility Study (BFS) on the Guelb el Aouj Project - with the final study due to be completed by the end of the first quarter 2007.
Based in Al-Jubail, Saudi Arabia, HADEED is the leading integrated steel producer in the Middle East, producing over 4 million tonnes per annum of long and flat products.
HADEED President, Mr Mohammad Al Jabr, described today's investment by his company in Sphere, as "representing our desire to become closely aligned with Sphere's iron ore project, along with joint venture partner, Societe Nationale et Miniere (SNIM) of Mauritania".
Sphere and SNIM plan to develop a 7 Mtpa Direct Reduction pellet project in Mauritania utilising SNIM's established rail and port infrastructure.
The Guelb el Aouj magnetite deposits have an Inferred Resource of 675 million tonnes (Mt) (36.4% Fe head grade) including 450 Mt (36.6% Fe) for the flagship East Deposit and 225 Mt (36.0%) for its Centre Deposit to support at least a 30 year life. The deposits can produce a very high quality magnetite concentrate (+70%Fe) and Direct Reduction (DR) quality pellets.
Sphere has also commenced an evaluation on two additional nearby deposits, Bou Derga and Tintekrate, with a magnetite-quartzite target in the order of 800 - 1, 100 Mt. The two deposits are located less than 20 kilometres south of Guelb el Aouj and are situated within the established joint venture area, itself embedded within a major iron ore province. All deposits in the JV area are located within 30km of SNIM's iron ore rail network that feeds its 160,000DWT iron ore port at Nouadhibou.
Stage 2B of the US$22 million BFS on the estimated US$850 million Guelb el Aouj project, includes a 25,000m RC drilling program to upgrade East Deposit's 450 Mt Inferred Resource to Indicated and Measured Resources and a 2,500m diamond drilling program to establish mine engineering and design for East's initial open pit.
The final Stage 3 of the Guelb el Aouj BFS is due to be completed by the end of the first quarter of next year.
