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Territory Resources chairman Andrew Simpson
Kalgoorlie Miner / Travis Anderson Territory Resources chairman Andrew Simpson

Just two years after being forced to the brink of collapse, Territory Resources plans to spend at least $500 million acquiring and developing a second iron ore mine.

The iron ore miner has spent much of this year running the ruler over iron ore projects around the world, particularly in Australia. Hong Kong commodities trader and Territory's biggest shareholder Noble Group, which will bankroll the acquisition, is also understood to be interested in Africa and is pushing for a deal to be done sooner rather than later.

In a fillip to the iron ore junior's credentials as one of the best turnaround stories of the year, Territory chairman Andrew Simpson said the company expected to be debt free by the end of this year if iron ore prices remained stable.

In the meantime, he said, the focus was on acquiring a project that could be brought into production within three years and generate minimum annual production of five million tonnes.

Speaking on the sidelines of the Diggers & Dealers conference in Kalgoorlie-Boulder yesterday, Mr Simpson said Territory's ideal project would probably cost at least $500 million to buy and develop.

Although the company hopes it can clear its debts by the end of the year, the acquisition is not contingent on the debt being repaid.

Mr Simpson and managing director Andy Haslam will fly to the Eastern States next week for the company's first roadshow in two years in a bid to sell its vision of a debt-free, two-operation Territory.

Territory's Frances Creek mine in the Northern Territory has enough ore to run until at least 2013, based on production of 2mtpa.

Territory came near to collapse amid the global financial crisis when a series of inter-company loans left it crippled by debt. It was thrown a lifeline late last year by Noble, which agreed to take on the company's most pressing debts.

Mr Simpson told the conference yesterday that when he inherited the chairmanship of Territory, its iron ore mine was "easily the highest-cost operation in the world" and its portfolio was a mixed bag of assets, most of which have since been sold.

"The only thing those projects had in common is that they were burning cash faster than Tiger Woods on a Saturday night," he said.

Territory shares fell 2.5¢ to 29.5¢.