Wuhan Iron & Steel (Group) Corporation (WISCO) has signed an agreement with Australian Western Plains Resources Ltd (WPG) to invest up to AUS$45 million (US$33.4 million) to set up a 50-50 joint venture for the miner's magnetite deposits in South Australia.

The move is WISCO's latest attempt to secure its overseas iron ore supply following its investment in another Australian miner CXM last year and a proposal to invest in Canadian miner Consolidated Thompson Iron Mines Ltd earlier this year.

The joint venture will develop Hawks Nest deposits, which stores up 570 million tons of ore with potential reserve of up to I billion tons, WISCO said in a statement on its website on Tuesday.

WISCO said quality iron ore concentrate would be acquired after simple magnetic separation. The company would take charge of exploration, feasibility study and construction.

Iron ore supply from mines owned by the company has failed to match its increasing demand, and has become a bottleneck in its development, WISCO said.

"So, the agreement on this project is of great significance to WISCO in building its overseas iron ore base," it said.

As per the agreement, Australia-listed WPG will specifically issue 15 percent of its shares to WISCO at a unit price of AUS$0.25. WISCO will become WPG's second shareholder after the deal.

"WISCO has agreed to sole fund a minimum of US$25 million for bankable feasibility study for the development of one or more of WPG's magnetite deposits at Hawks Nest. After the minimum has been spent, if necessary WISCO will sole fund another AUS$20 million without increasing its 50 percent participating interest in the joint venture," WPG said on its website.

In another development, WISCO and Canada's Consolidated Thompson Iron Mines Ltd have agreed to extend to June 1 the deadline for WISCO's proposal to invest in the miner, pending government approvals. WISCO plans to invest US$240 million to acquire a 19.9 percent stake in the Canadian mining company.

Consolidated Thompson said yesterday that the closing of the deal is still subject to approval by regulatory authorities in both countries. The company has applied to the Toronto Stock Exchange to extend the price protection in respect of the issuance to WISCO of Consolidated Thompson's common shares at a deemed price of CDNUS$2.00 to June 1, 2009.

(China Daily May 7, 2009)