Centrex Metals signs hermatite ore sales agreement with Chinese company

Reported by Proactive Investors on Friday, 13 November 2009 (on November 13, 2009)

Centrex Metals (ASX: CXM) and Shenyang Orient Iron & Steel have penned a five-year Hematite Ore Sales Agreement covering the sale of 1 million tpa of Wilgerup hematite product.
The deal, which includes a one-year extension option, finalises the hematite supply details that were the basis for Shenyang’s initial investment in Centrex in September 2006.
News of the deal saw shares in the company rise 3.6% to 72.5c.
Centrex managing director Gerard Anderson said concluding the Shenyang Hematite ore sales agreement ensured 100% of Wilgerup hematite ore is sold under long-term sales agreements for a minimum of 5 years with the ore sales price determined by the existing Hamersley Benchmark pricing system but with flexibility should that pricing mechanism be replaced.
The Wilgerup hematite deposit is located 20kms southeast of Lock in central Eyre Peninsula, South Australia. The deposit is 100% owned by Centrex.
The Wilgerup North Hematite Pod occurs as a tabular moderate to steeply dipping 800m x 60-100m body with high grade intervals ranging from 10 – 100m and averaging 35m in thickness. The massive hematite lies buried immediately beneath 20-25m of Tertiary sand/clay.
The massive hematite is overlain in places by hematite clay consisting of high grade hematite with clay intervals that appear to be clay infilling palaeo-fractures. The hematite clay grades from 45-60% Fe.
The hematite grades vertically into hematite carbonate which itself grades vertically into massive dolomite. The hematite carbonate consists of massive and finely banded hematite with relict fine bands of silica/carbonate and secondary carbonate veining. The hematite carbonate generally grades 45-55% Fe.
Shenyang Orient Iron & Steel Co is a privately owned fully integrated medium sized steel producer with its main production facilities located in Shenyang City, Liao Ning Province and Jixi City, Heilongjiang Province in China.
The company produces two million tonnes of crude steel per annum and is expanding capacity to reach three million tonnes.

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