Australian iron ore explorer IMX Resources NL (former Gold Stream Mining) has announced the signing of an agreement with China's Jilin province-based Tonghua Iron & Steel's subsidiary Jilin Tonghua Iron & Steel (Group) Mining Co., Ltd ("Tonghua Mining") to sell the entire Cairn Hill magnetite / copper ore production in South Australia, and also to sell around ten percent of IMX to Tonghua Mining for a price tag of $13.93 million. This is Tonghua Iron & Steel's first foray into the Australian resources sector.
According to the agreement, Tonghua Mining will purchase 100% of production from the IMX Resources Cairn Hill magnetite and copper project. For the first three years of the project, the company will buy approximately 1.2 million mt to 1.4 million mt of ore per year. The ore will be sold on an FOB basis with the target shipping specification averaging > 55 percent Fe and 0.43 percent Cu. The prices will be determined according to the annual price negotiations between Chinese mills and Australian miners, while adjustments will be made for processing and logistics costs.
Tonghua Mining plans to construct a processing facility in China to process the Cairn Hill ore to produce a high grade magnetite concentrate and a copper / gold concentrate.
Tonghua Iron & Steel is headquartered in Changchun, capital of Jilin Province in China. Tonghua is the largest steel producer in Jilin Province, with an output of seven million mt per year of long and flat products. The company is planning to expand its capacity to over 10 million mt by 2009.