MELBOURNE, June 20 (Reuters) - Australian iron ore producer Grange Resources is looking to sell at least a 30 percent stake in its $2.9 billion Southdown magnetite project in Western Australia to ease the funding burden, it said on Wednesday.
Grange appointed Deutsche Bank to advise on the selldown of its 70 percent stake in the project, which is designed to produce 10 million tonnes a year of magnetite concentrate for more than 30 years.
“The introduction of a third joint venture partner to the project is the best way to increase the project’s certainty and viability, and reduce the risk profile that Grange currently has with this project,” Grange Managing Director Russell Clark said in a statement.
There was interest in Southdown from around the world, particularly China and other Asian countries, he said. The project is already 30 percent owned by a Japanese consortium made up of trading house Sojitz Corp and Kobe Steel .
Kobe Steel, Japan’s no.4 steel maker, is reported to have paid between A$50 million and A$80 million when it bought its 10 percent indirect interest, which would value all of the equity in the project at A$500 million to A$800 million, Clark said.
Southdown is key to Grange’s growth as it is expected to produce four times as much magnetite as its existing Savage River operation.
Grange shares rose 2 percent to A$0.51 on Thursday outpacing a 0.2 percent rise in the broader market and valuing the company at A$589 million.
$1 = 0.9912 Australian dollars Reporting by Sonali Paul; Editing by Ed Davies