SYDNEY Australia's Padbury Mining Ltd PDY.AX said it had secured almost $6.5 billion in funding to build a new deepwater port and railway at Oakajee in Western Australia, potentially opening a new export hub for the region's iron ore riches.
Plans for a port at Oakajee in Western Australia's Midwest region have been in the works under various companies for decades but have so far failed to get off the ground due to volatility in commodity markets and difficulty securing the massive investment needed.
"The project has had a thirty year gestation period and it is a game changer for both Western Australia and the Midwest iron ore industry," Padbury said in a statement on Friday.
Shares in Padbury surged more than 150 percent at one point on news of the funding, which is being provided by Australian equity investors in three tranches.
Padbury said it had been working closely with major Korean engineering firms about the construction phase of the project, which has a $6 billion budget, but did not give a timeline.
"The Australia-Korea Free Trade Agreement recently signed by the Prime Minister, has opened the door to greater investment and trade opportunities being created between Korean and Australian companies," Padbury said.
Australia and South Korea formally signed a free trade agreement earlier this week.
A new port at Oakajee, near Geraldton, would be a small step to breaking the dominance of the iron-rich Pilbara district to the north, where iron ore heavyweights BHP Billiton (BHP.AX), Rio Tinto (RIO.AX) and Fortescue Metals (FMG.AX) ship hundreds of millions of tons each year.
"The project will enable a significant number of iron ore projects to move forward into production as well as providing existing producers with the ability to increase their production" Padbury said.
Gindalbie Metals (GBG.AX) sees the port at Oakajee assisting it in its long-term expansion plans in the midwest area.
Padbury would retain a 36 percent stake in the subsidiary developing the project, with the new unnamed equity investors holding the remaining 64 percent.
Padbury has the right to claw back its shareholding to 49 percent once the private investment has been returned.
Its shares last traded up 85 percent at 3.7 Australian cents, valuing the company at about A$125 million.
(Reporting By Lincoln Feast; Editing by Paul Tait)