Dragon Energy eyes new mining projects
Wed Mar 11, 2009 2:36am EDT
reuters.com
By Fayen Wong
PERTH (Reuters) - China-linked Dragon Energy Ltd (DLE.AX: Quote, Profile, Research, Stock Buzz) is eyeing investments in new mining projects and would be comfortable with deals of up to A$100 million ($64.2 million), the head of the Australian phosphate explorer said on Wednesday.
Perth-based Dragon, backed by China's Shandong Group, said it sees itself as a link between Chinese capital and cash-strapped project owners, and is hunting for investment opportunities in a range of commodities, including coal, iron ore, copper and uranium within and outside Australia.
"Shandong Group, our cornerstone investor, sees Australia as an important resource base and we are looking for investment opportunities in new projects," said Xu Gang, managing director of Dragon Energy, who was speaking at the Reuters Global Mining and Steel Summit.
"We may be a small company, but through our cornerstone investor, we'll be comfortable with deals of up to A$100 million."
China's Shandong Group, which owns a 57 percent stake in Dragon, is a privately held firm which has businesses in coal and iron ore mining, power generation and steel milling. Dragon says Shandong has a total asset base in excess of over A$500 million.
Dragon was listed on the Australian Stock Exchange last month and has a market capitalization of A$10.9 million.
It has sealed a deal with China's Yantai Power Development Ltd to jointly explore resources projects in Australia and elsewhere. Under the agreement, Dragon will identify suitable investment projects while Yantai will fund the deals.
Despite the global economic downturn, Dragon said Chinese firms have not lost their appetite for investments in the commodity sector and many potential investors are looking beyond the current price collapse in the commodity cycle.
"This is the perfect buyers' market. The stars are now aligned for buyers," said Anthony Ho, executive director and company secretary of Dragon.
Dragon has looked at about 10 projects in the past two months and is in early discussions on a coal miner owner in the United States, Xu said, adding that it is mainly only interested in projects that are either in the advanced exploration phase or are already in development.
Dragon's involvement in these new investments would range from being a key shareholder to taking a minority stake for areas it does not have technical skills.
"We will choose the club when we get to the ball. Until we find a life project, we can't decide on the parameters of our investments," Ho said.
Dragon plans to spend A$3.8 million over the next two years to explore phosphate, used mainly in fertilizers, in Australia's northeastern state of Queensland.
Xu said old drilling data from the 1960s showed that the two primary phosphate projects, Babbling Brooke Hill and Riversleigh, have a combined tonnage of about 50 million tonnes.
Dragon said its nearby Big Toby project was chasing larger volumes of phosphate.
(For summit blog: blogs.reuters.com/summits/)
($1=A$1.558)
(Editing by Ben Tan) |
