Murchison Metals is ready to throw the baby out with the bathwater, continuing talks to sell its stakes in the beleaguered Oakajee port project and its sole producing mine in Western Australia.
Such a move would leave the miner with two iron ore exploration projects, Rocklea in the Pilbara region and Weld Range in the Mid West.
However, Murchison last month said it was “considering a number of strategic alternatives” for Rocklea and that little work had recently been done on Weld Range.
The company halted trading in its shares before the market opened on Monday, so it could continue confidential and incomplete discussions regarding the sale of its 50 per cent stakes in the port and rail project, and Jack Hills mine, both in WA’s Mid West region.
Murchison’s shares last traded at 27.5 cents, compared to 76.5 cents on June 27, when it conceded it couldn’t afford to pay for its share of the $5.94 billion port project and had begun talks with Chinese parties on their participation.
Independent analyst Peter Strachan said asset sales by Murchison were inevitable.
“It puts under a cloud the whole project, until the ownership is sorted out,” Mr Strachan told AAP.
Murchison managing director Greg Martin flagged the possibility of asset sales to fund Oakajee as soon as he was appointed in July, following a major board shake-up that included the departure of founding chairman Paul Kopejtka.
WA Premier Colin Barnett, who is determined to see Oakajee get up, has in recent months appealed directly to Chinese parties for their involvement.
According to a recent News Ltd report, China’s National Development Reform Commission, which oversees outbound foreign direct investments by Chinese companies, has ordered sovereign wealth fund China Investment Corp to run the ruler over Oakajee.
The Western Australian state government has imposed a December 31 deadline for Murchison and joint venture partner Mitsubishi to complete a strategic review aimed at restructuring the project’s ownership.
By late September, Murchison had scaled back activities at Oakajee and a planned expansion of Jack Hills, a mine that has been operating for about five years and is also an equal joint venture with Mitsubishi.
Murchison’s cash reserves are dwindling as an April 2012 debt refinancing deadline approaches.
