Shot in the arm for Roy Hill
Gina Rinehart's equity partners in the Roy Hill iron ore project have backed the company for an extra $200 million, injecting new equity as Roy Hill pushes on with early engineering works ahead of a debt deal to fund the bulk of the project's construction costs.
Roy Hill says it is "cautiously optimistic" it will land a debt deal before the end of the year, but with engineering contractor Samsung C&T hitting the ground running after its May appointment, Roy Hill has returned to its equity partners to fund early works.
Australian Securities and Investments Commission records show it is the first time in almost a year that Roy Hill has disclosed an equity call on its part-paid shares, with $1.67 billion now invested in the 55 million-tonne-a-year port rail and mine project.
Last year's iron ore price crash forced Roy Hill to shed staff and freeze major spending on the project, but the Samsung appointment has led to a resurgence in activity. The Korean engineering firm has launched contract tenders for early civil works and foundation infrastructure, including bulk earthworks, road construction, water and gas pipeline relocation and staff housing.
Roy Hill is also spending on Pilbara accommodation villages, its new corporate headquarters and remote operations centre at the Perth Airport business precinct.
Roy Hill's last annual financial statement showed it had $636 million at bank at June 30, 2012, with $786.5 million in capital commitments showing on its books, along with another $440 million committed to non-cancellable operating leases over a five year-plus period.
After the exit of Korea's STX Corp from the partnership, through the sale of its 2.5 per cent holding to Japanese trading house Marubeni, Roy Hill's equity partners include Mrs Rinehart's Hancock Prospecting, Marubeni, Korean conglomerate POSCO and Taiwanese steelmaker China Steel Corporation.
The latest drawdown comes as the company plays down reports it has struck a compromise with Korean and Japanese export credit agencies over a push for completion and ore purchase contract guarantees. Roy Hill declined to comment on the equity drawdown last night.
