Bloomberg News

Mitsubishi to Buy Murchison Joint Ventures for A$325 Million

November 24, 2011

(Updates to add managing director comment in fourth paragraph.)

Nov. 24 (Bloomberg) -- Mitsubishi Corp. agreed to pay partner Murchison Metals Ltd. A$325 million ($315 million) for its stakes in two ventures, giving Japan’s largest trading house control of iron ore mine, rail and port projects in Australia.

The deal implies a value of 51 cents for each Murchison share, 85 percent more than its last closing price, the Perth- based company said today in a statement. The company owns a half stake in Crosslands Resources Ltd., owner of the A$3.7 billion Jack Hills iron ore mine expansion project, and in the A$5.94 billion Oakajee port and rail project, both in Western Australia.

Buying the stakes will give Mitsubishi greater exposure to surging iron ore demand, with consumption in China, the biggest buyer, forecast by Rio Tinto Group to double by 2020 from 2008 levels. Murchison said in September it was revising plans for Oakajee, designed to open Western Australia’s Mid-West region for iron ore exports to Asia, after failing to secure funding.

“Mitsubishi has put forward an offer that represents a good financial result for Murchison shareholders,” Greg Martin, Murchison’s managing director, said in the statement. “We will also continue to pursue discussions with other parties to give shareholders comfort this is the best option available.”

Murchison’s shares rose 49 percent to 41 cents at 10:50 a.m. in Sydney trading, the highest since Sept. 23. A shareholder vote is expected in February, Murchison said.

Oakajee port in August last year signed initial agreements with potential customers including Karara Mining Ltd., a venture between Gindalbie Metals Ltd. and China’s Anshan Iron & Steel Group and Sinosteel Midwest.

--Editors: Keith Gosman,

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net


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