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Palmer, Australasian agree on Balmoral
Palmer, Australasian agree on Balmoral

After almost five years of haggling, Clive Palmer and his listed vehicle Australasian Resources have agreed to double the size of the Balmoral South project in the Pilbara.

As part of a multi-faceted deal announced yesterday, Mr Palmer has granted Australasian access to an additional one billion tonnes of magnetite in return for taking a 50 per cent stake in Australian's subsidiary, International Minerals (IM). IM holds the rights to the Balmoral South iron ore and now boasts two billion tonnes.

Although Australasian's indirect iron ore rights will remain at one billion tonnes - courtesy of its now half share of the two billion tonne IM - Australasian is likely to argue to shareholders it owns part of a bigger overall project with better financing prospects.

Australasian hopes to begin construction of Balmoral South, next to CITIC Pacific's $US6.1 billion Sino Iron project, which is also based on Palmer iron ore rights, this year, subject to financing. Metallurgical Corp of China (MCC), which is the lead contractor at Sino Iron, has signed a memorandum of understanding to build Balmoral South.

Australasian and Mr Palmer have had on-off talks about adding an extra billion tonnes to Balmoral South since 2007. Complicating talks was that Mr Palmer's private vehicle Mineralogy owned 67.9 per cent of Australasian, meaning a big grant of equity for more iron ore rights would be problematic.

Mineralogy agreed to invest a further $5 million in Australasian in return for stock at 16.5¢ a share, taking its shareholding to 69.9 per cent. The rights and equity investment require approval of Australasian's minority shareholders.

Australasian's lightly traded shares eased 0.5¢ to 18.5¢.