While the rise and fall of opportunist Pilbara iron ore aspirant Cazaly Resources Ltd has won and lost sharemarket punters millions of dollars, its battle for the Shovelanna deposit is destined for the courts for months, possibly years.
In the wake of State Resources Minister John Bowler confirming iron ore giant Rio Tinto’s lapsed ownership of the 132 million tonne resource, the company has indicated it is still in no rush to develop the project it has held for more than 30 years.
Speaking in Perth, Rio’s London-based chairman Paul Skinner said the company felt no obligation, moral or otherwise, to advance Shovelanna’s development. “As a major global investor, we have to find a point at which host governments’ interests and ours are properly aligned and that the particular resource is developed in a way that will give the long term best value case to WA,” he said.
It pretty much followed the line taken by Mr Bowler in his belated explanation of his decision that the public interest was best served by terminating Cazaly’s Shovelanna application.
Cazaly’s joint managing director Clive Jones said the key for his company was the development of the state’s iron ore resources – “not warehousing public assets to be used to the benefit of any single company’s commercial interest”.
“Rio has held this tenement via associated parties for more than 30 years and has not shown any desire to develop it, not having drilled a hole for more than 20 years,” he said.
Cazaly has lodged freedom of information applications for access to the legal and other advice to the minister, and plans legal action to force a judicial review of the decision
It was more than 30 years ago that Rio, via the Rhodes Ridge Joint Venture, was granted the ground, which converted to Exploration Licence 46/209 on August 27, 1989.
Since then, Rio has applied for numerous expenditure exemptions and extensions, granted under the state’s unwritten “iron ore policy,” which treats iron ore tenements different from those of other minerals.
The Shovelanna prospect was due to expire at midnight, August 26, 2005.
Rio paid the state government its forthcoming year’s rent for the licence on July 28, 2005. Cazaly’s shares were trading at 26.5c.
The money was received and banked a few days later, and many would argue that this acceptance consummated the contract.
On August 17, 2005, over a million Cazaly shares changed hands and the price rose to 29.5c.
On August 19, Rio couriered the relevant forms to the Marble Bar mining registrar’s office but they were not received by the required close of business on August 26 and the licence automatically expired at midnight.
Somewhat strangely, the package had been received by the courier’s agent – Lenny Lever’s Discount Store – at Marble Bar at about 4pm on August 26. However, it was not collected until August 31.
Early Monday afternoon, August 29, Cazaly applied for a new exploration licence over the Shovelanna prospect and its shares closed at 29c.
The story then assumed biblical proportions, with the media and the market hailing it as a “David and Goliath battle,” the mighty multi-national against the poor West Aussie battler.
If this was the case, it was Cazaly which brought Titan to the field on November 28, with the announcement that it had signed an agreement with arch Rio rival BHP Billiton for the sale of Shovelanna iron ore that could net Cazaly up to $85 million a year.
The MOU was for about five million tonnes a year, subject to Cazaly delineating a 100 million tonne reserve.
Cazaly said it expected first production within two to three years of the necessary approvals, after having previously forming a joint venture with Echelon Resources Ltd for a 14 per cent stake on completion of its obligations and backing from international banking group Investec.
Cazaly’s shares, which had been trading at daily volumes up to over nine million shares, jumped from $1.06 to $1.76 on November 29 and the game was on. Cazaly’s shares went on to close at $2.12 before Mr Bowler’s decision, and this week were trading at around 50c.
