CORRECTED – CORRECTED-UPDATE 3-RMG, Teck court Chinese in Australian deposit

(Corrects reference in last paragraph to China, not Canada)

* Chinese and Indians among potential bidders

* 4.4 mln T copper, 6 mln oz gold, 225 mln lbs uranium

* Also contains haematite iron ore and rare earths

* Seen as possible test case for FIRB if Chinese firm bids

* Deposit could be worth around $500 million, analyst says

By Tom Miles

BEIJING, April 8 (BestGrowthStock) – Australia’s RMG Services and
Teck Australia, a unit of Canada’s Teck Resources (TCKb.TO: ),
are seeking buyers for a potential sale of the Carrapateena
deposit, one of Australia’s largest undeveloped copper and gold
projects.

Carrapateena, which one analyst estimated could be worth
around $500 million, is part of the same geological structure
as BHP Billiton’s (BHP.AX: ) huge Olympic Dam mine and OZ
Minerals’ (OZL.AX: ) Prominent Hill copper-gold mine.

“This is a world class asset and we expect there’ll be
interest from miners around the world,” RMG Vice President of
Business Development Phil Gomez told Reuters by phone.

Gomez declined to put a value on the deposit.

“We’ve been taking the approach that we don’t want to put
any number out there,” he said.

Carrapateena is estimated to hold 4.4 million tonnes of
copper, 6 million ounces of gold and 225 million pounds of
uranium, as well as haematite iron ore and rare earths,
according to a teaser seen by Reuters — a document given to
potential buyers to elicit interest early in a sales process.

Based on an estimated in-the-ground value of 3 or 4 cents
per pound of copper and $25 per ounce of gold, the undeveloped
deposit could be worth in the neighborhood of $500 million,
said John Hughes, a Toronto-based analyst at Desjardins
Securities, who covers Teck.

He said the estimate was a guess based on the very early
stage of the project, and does not take into account
site-specific operating requirements or capital concerns.

RMG and Teck, with 58 percent and 34 percent of
Carrapateena respectively, said a month ago that they had hired
Rothschild [ROT.UL] to look at strategic options for the
project.

A source involved in the bidding earlier said the sellers
were courting Chinese buyers and were expecting non-binding
expressions of interest to be submitted by late May.

The source, who asked not to be identified because of the
confidentiality of the deal, said acquisitive state-owned firms
such as Minmetals Corp, Chinalco, CITIC and China Nonferrous
Metal Mining Group could be potential bidders.

Gomez said there was still no final decision to sell.

“We haven’t made a decision to sell. We are running a sale
process and we’ll see how the process pans out,” he said. “We
haven’t set any ultimate deadline.”

A QUESTION FOR FIRB

Chinese companies have been hunting Australian resource
assets for several years, encouraged by the government in
Beijing, which wants to secure supplies of raw materials to
sustain China’s economic boom for decades to come.

But they have had mixed success, largely limited to buying
stakes in Australian firms rather than gaining outright
control.

China’s most ambitious move was a $19.5 billion bid by
state-owned metals firm Chinalco [ALUMI.UL] to double its 9
percent holding in Anglo-Australian miner Rio Tinto (RIO.L: )
(RIO.AX: ). But Rio opted for a tie-up with BHP instead.

For a timeline on Chinese investments in Australia, please
click on [ID:nLDE60I0R7]

Teck has spent about A$30 million on exploring the site
since 2005, when it formed a joint venture with RMG, a
privately-held company owned by Australian prospector Rudy
Gomez.

“Teck Resources was one of the majors hardest hit by the
late 2008 recession and may be looking to another major to
develop the project,” analysts at IM Mining International said
in a note on March 10.

Carrapateena is situated in a 1,070 square km site in South
Australia. The deposit, lying at a depth of about 470 metres,
would be suitable for block-cave mining, according to the
teaser.

The document said that there are no known native title or
environmental obstacles to a sale of Carrapateena, which lies
outside the Woomera Prohibited Area, a huge weapons testing
site.

But a sale to a Chinese state-backed bidder or consortium
would need to be notified to Australia’s Foreign Investment
Review Board and approved by Treasurer Wayne Swan.

Australia last year blocked a takeover of OZ Minerals by
China’s Minmetals because of the proximity of its Prominent
Hill mine to Woomera. The companies later agreed a deal that
excluded Prominent Hill.

“This could be a test case for FIRB, but given the fact
Carrapateena represents a large scale development asset, the
chances of a positive outcome are encouraging,” said the source
involved in the bidding.

Gomez said the company had not yet approached FIRB. He also
said he did not expect the presence of uranium in the mine to
be an obstacle to a sale.

“I can’t speak for the regulators but uranium’s not the
only metal that’s in the body. I don’t think that would prevent
parties from China or India or elsewhere from acquiring this
asset,” he said, adding that the government had taken a more
relaxed attitude on uranium policies in recent years.

Investment Research

(Additional reporting by Cameron French in Toronto)

CORRECTED – CORRECTED-UPDATE 3-RMG, Teck court Chinese in Australian deposit