Chinese firm eyes stake in Australia's Aurox -paper

HONG KONG, May 26 (Reuters) - China's state-owned Chengde Iron & Steel Group is in talks to buy a stake in Australian iron ore prospector Aurox Resources (AXO.AX), a Hong Kong newspaper reported on Monday.

"Chengde Steel is interested in buying a stake in our company," the South China Morning Post quoted Aurox's managing director, Charles Schaus, as saying.

Schaus said Chengde Steel, a unit of China's top steel producer Tangshan Iron & Steel Group, had expressed interest in March last year but it was hard to say when a deal would be sealed or how large a stake the Chinese firm would buy.

"As (Chengde Steel) is owned by the government, it takes a longer time to make a decision," Schaus said. "We're very patient and will just wait to see what happens."

It would be the second investment made by a Chinese firm in Aurox after RockCheck Steel Group, one of China's top 10 private steel makers, bought a 9 percent stake in the Perth-based resources firm for A$10 million last July, Schaus said.

He gave no further details.

Aurox has signed a 15-year contract to supply both Chengde Steel and RockCheck iron ore from the company's Balla Balla deposits in the Pilbara region.

Shares of Aurox egded up 0.5 percent to A$1 on Monday. (US$1=HK$7.8) (Reporting by Donny Kwok; Editing by Anne Marie Roantree)