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sabusinessmonthly 1 October 2009

OIL GIANT BP WILL LOOK AT EYRE PENINSULA TOWNS, INCLUDING PORT LINCOLN, AS POTENTIAL LAND BASES FOR HELICOPTER SERVICES TO ITS EXPLORATION RIGS OFF THE GREAT AUSTRALIAN BIGHT. [p3]

Union claims that shop assistants don’t want to work on public holidays are being contradicted by shop owners and managers. [p5]

CONSTRUCTION HAS BEGUN ON THE $403 MILLION PROJECT TO LINK ADELAIDE’S NORTH AND SOUTH WATER NETWORKS. CONTRACTS FOR PIPES, PUMPS, VALVES AND MORE ARE ON THE TENDER BLOCK. [p14-15]

IRONHEART

BANK REFORM HOPE FADES

SOUTH AUSTRALIAN BUSINESS JOURNAL

MonthlyBusiness

APRIL 2011

Commercial Property

RENT-RISE SQUEEZE [p16]

[p4]

DEEP IN SA’S OUTBACK, MINING COMPANY WPG RESOURCES IS POISED TO BEGIN CONSTRUCTION OF THE STATE’S THIRD IRON MINE. ARMED WITH $200 MILLION, BOB DUFFIN IS JUST WAITING TO TICK A COUPLE OF BUREAUCRATIC BOXES BEFORE HE SENDS IN THE EARTHMOVERS.

[p12-13]

THE MAN WITH OUR ENERGY [p7]

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THE STATE’S IRON ORE PROVINCE IS GAININGMOMENTUM. CAMERON ENGLAND VISITS WHAT’SLIKELY TO BE THE NEXT OPERATING MINE

Peculiar storyon Woomera’s‘Y

O U w i l lnot f indany highergrade ironore in Aus-

tralia – or anywhere in theworld,’’ Bob Duffin exclaims,letting a handful of powderygrey/black ore run betweenhis fingers.

We are about one-and-a-halfhours’ drive southeast of CooberPedy, standing in an incon-gruously green landscape – theresult of the best rain up herefor decades. Just in the distance,a small ironstone-capped hilljuts out of the landscape.

It is Peculiar Knob – one of fewlandmarks in a flat, treeless ex-panse, and the inspiration for thename of WPG Resources’ pro-posed iron ore mine.

The only evidence of the pro-ject is tens of bags of powderyiron ore – the results of drillingat the site.

But if everything goes to plan,the company will be breakingground on SA’s third iron oremine by the middle of the year.

It is just the start of WPG’sSouth Australian ambitions how-ever. The company is hoping tobuild at least three projects inthe area – two iron ore and onecoal – operating from a centralaccommodation and manage-ment hub.

Peculiar Knob is first cab offthe rank. WPG has defined anore body about 1200m long,starting at just 20m below thesurface, which is of sufficientgrade to be classed as directshipping ore (DSO) – iron orethat does not have to be upgra-ded before it is exported.

The company is now waitingon its two final approvals forPeculiar Knob – the developmentapplication for a facility at PortPirie where iron ore will behandled, and the Mining andRehabilitation Plan (MARP) forthe mine.

The MARP has been delayedslightly, while the company putsin place a management plan forthe thick-billed grass wren – athreatened species that is foundacross much of the state.

WPG expects to hear backabout the status of the MARP inMay, and the Port Pirie develop-ment in July, after which it canget on with building the mine.

First exports are expected justnine months after the companycan break ground, with exportsof 3.3 million tonnes a year ex-

pected. Capital expenditure atthe mine and Port Pirie is ex-pected to be $139 million, withanother $29 million in workingcapital needed to strip the over-burden off the ore body.

However, the company latelast year raised just over $200million to fund the project, whichMr Duffin says will be a strongcash generator.

WPG is also waiting on an-

other piece of important news inthe first half of the year. ItsHawks Nest iron ore project,south of Peculiar Knob, lieswithin what is know as the Woo-mera Prohibited Area – long acause for friction between themining sector and Defence.

In 2009 a Chinese investmentat Hawks’ Nest worth $45 millionwas blocked by the Departmentof Defence, while the full

takeover of OZ Minerals was alsoblocked on national securitygrounds because its ProminentHill mine was within the WPA.Prominent Hill was retained byOZ, with the rest of its assetswere sold to the Chinese.

WPG is now waiting on aresponse from the Federal Gov-ernment to a review, led by DrAllan Hawke, into how miningand defence can coexist in the

Skin inthe game

1MARGIN loans are the ultimate signof skin in the game. Borrow a little,rely on growth and the underlyingsecurity will take care of itself, thetheory goes.Shareholdersin GerardLightingGroup(GLG)may liketo see howthe mastersdo it.A company called Gerard LightingInvestments No 2 – GLG’s second-largest shareholder – has entered a$13 million margin loan using 45million GLG shares as security toallow for ‘‘the re-arrangement offamily interests’’. That’s about $42.8million on the line, or about 25 percent of all issued shares.Directors of the company includeGLG chairman Rob Gerard andmanaging director Simon Gerardwho, it might be said, have someknowledge of how Australia’sfinancial system works.No movement from GLG’s largestshareholder, Gerard LightingInvestments No. 1, and its 46.9million shares.

2 SKIN in the Game is pleased to havemade its point with its first repeatperformer. Penrice Soda Holdingslast month delivered its $1.2 millionloss on the back of plant failure andfloods.Even worse,thecompanyadmittedit hadtriggereddebtcovenantissues,although it continued to enjoy thesupport of its bankers.None of this fazed chairman DavidTrebeck, who told last year’s annualmeeting that he would continue tobuy shares in the company because‘‘the current share price. . . does notadequately reflect the company’sfuture potential’’.Soon after, he picked up another100,000 shares at 38.6c.News of the covenant issue provedno barrier to another raid (this timeat a bargain price of 23c) by MrTrebeck. And the message appearsto have rubbed off.Directors David Groves, AndrewFletcher and John Hirst made theirown moves in the days following.Directors notices were duly filedwith the Australian SecuritiesExchange but bonus points go toPenrice’s marketing team formaking sure Skin in the Gamereceived copies of the notices.

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BAGGED:WPGResourcesexecutivechairmanBob Duffinat the newPeculiarKnob minesite, withsamples ofthe highgrade ironore fromdrill holesin thearea.

‘‘ Ifeverything goesto plan, WPGResources willbe breakingground on SA’sthird iron oremine by themiddle of theyear

of ironedge

area. The WPA is highly pro-spective for minerals, with Geo-science Australia estimating itcontains 62 per cent of Austra-lia’s known copper resources and78 per cent of known uraniumresources, but Defence is con-cerned about its ability to con-duct sometimes sensitive wea-pons testing in the region.

The review advocates break-ing the WPA, which alreadycontains three mines includingOlympic Dam, into three zones.

One small ‘‘core zone’’ wouldbe entirely off limits, whileaccess to the other two, lesssensitive zones would be basedon clear, publicly availableguidelines.

Mr Duffin is confident that

mining will be allowed in muchof the WPA, although part or fullChinese ownership will still befrowned upon. WPG hopes tocommit to project developmentat Hawks Nest by 2015.

The scale of that project islarger than Peculiar Knob, withexports of 6-10 million tonnes ayear from 2016-17 envisaged.

As if that wasn’t enough, thecompany is also looking to proveup a coal resource to the south-west of Coober Pedy.

The company is aiming toestablish a 200 million tonne coalresource at the Penrhyn project,where it hopes to mine coal fordomestic power use or export,with the coal upgraded usingclean coal technology.

2– 3 May 2011 – Hilton Adelaide

Book now! Be part of South Australia’s premier resources event.

Register on-line at www.saresourcesconf.com

or contact Jade on 08 9321 0355

Plus “Unlocking SA’s Mineral Wealth” Technical Forum

4 May, Hilton Adelaide, complimentary registration

Celebrating 10 years!

w w w.saresourcesconf.com

Coober PedyCairn Hill

PECULIAR KNOBPenrhyn

Hawks NestCoober Pedy

Olympic Dam

Woomera

Challenger

Port Pirie

REFERENCEIron Ore ProjectCoal Project

Highway

Railway Line

Kilometres

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SA firmsboost theirdata banksINCREASED amounts of computerfiles have prompted many SouthAustralian companies to investheavily in data storage, HindmarshIT infrastructure firm ComputerSite Solutions (CSS) says.

CSS director Brendan McColl sayssome firms are boosting their datastorage by 50 per cent each year. Thecompany recently completed amajor mechanical upgrade to the HPSA Data Centre at the LockleysMortgage Centre.

‘‘South Australian organisationsstill tend to favour having their datastored in local facilities rather thaninterstate or overseas, so expansionof existing centres is essential,’’ MrMcColl says.

Energy efficiency is a key prioritywhen expanding data centres.

‘‘Data centres and computerrooms are big consumers of power,so the IT departments and thefinance people within organisationsare now working much more closelytogether to decide upon appropriatesolutions,’’ he says.

In the past year, CSS has com-pleted other major data centre up-grades for Adelaide City Council,BHP Billiton and Viterra.

April 2011

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