GME4 attracting foreign investors

Industry News 2009-02-23 19:59:53

 "Brazilian mining exploration company Global Mining Exploration, or GME4, is attracting foreign investor interest in a proposed sale of 80% of its PI4 iron ore mine project ", a company official said Wednesday.

"We have been in talks with Indonesian investors and have also had interest from India's Sesa Goa, and two Chinese companies, China Minmetals and China Nonferrous Metals," GME4 partner Joao Carlos Cavalcanti told Dow Jones Newswires.

GME4 has ambitious plans and aims, by 2012, to become the alternative iron ore supplier to the three global majors: Brazil's Companhia Vale do Rio Doce (VALE), Australia's BHP Billiton (BHP) and Rio Tinto (RTP).

"We will play hard to compete," Cavalcanti said.

Cavalcanti, a geologist, sold an iron ore deposit three years ago to Indian investor Pramod Agarwal in Bahia State for $360 million. Agarwal is reported to be a representative of steel mogul Lakshimi Mittal. Cavalcanti's partner is Brazil's Banco Opportunity. The company has a portfolio of 22 mining projects in six Brazilian states, in which it hopes to attract investors.It will embark May 30 on a world roadshow focusing on selling the 80% stake in its $2.4 billion-valued, 800 million-metric ton PI4 iron ore mine.

GME4's roadshow, organized by Credit Suisse, will start in Dubai and take in India, Australia, Japan, Korea, China, Russia and Europe before ending in the U.S. in mid-June. According to Cavalcanti, the PI4 mine will be able to produce 20 million metric tons a year of ore pellet feed worth $1.4 billion. PI4 is located in Piaui State, northeast Brazil, a non-traditional iron ore mining region. The Piaui deposits have around 32% iron content and are 16 kilometers from the route of the Transnordestina Railroad, which is expected to be operational in 2011. The railroad will connect two relatively new deepwater ports: Suape, near Recife, and Pecem, near Fortaleza

According to Cavalcanti, the ore will arrive at port for a total cost of between $21 and $22 per ton, including mining, pellet-processing and transportation.Cavalcanti said he has signed an advantageous energy supply contract for the mine from the Sobradinha dam, the largest in northeast Brazil.He said he would pay between $4 and $7 per ton for the electricity used in processing the iron ore.

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