Sunday, 19 February 2012

Murchison Metals ends Oakajee Port & Rail involvement with sale to Mitsubishi completed

Murchison Metals (ASX: MMX) has now wrapped up its interest in Crosslands Resources and the Oakajee port and rail infrastructure projects, after completing the sale to Mitsubishi Corporation for $325 million in cash.

Greg Martin, managing director of Murchison said that completion of the Mitsubishi Transaction marked the end of an era for Murchison.

“Murchison had a visionary proposal for the mid-west region, which ultimately proved beyond its capacity given market conditions. That vision is now left to others to realise.

“Fortunately, we have been able to secure a cash value for our mid-west assets which recognises the value built up in those assets over a number of years as noted in the Independent Experts Report that was prepared for the transaction.

"Ultimately, this outcome is in the best interests of the company given the significant risks associated with the very large capital costs required to develop these projects, particularly for a company of Murchison’s size, and raising ongoing working capital."

There are some payments to be made by the company including $20 million to Chameleon Mining NL in full and final settlement of the litigation commenced against Murchison and Crosslands and repayment of the sum of $61.4 million to RCF to extinguish the RCF debt facility.

Other commitments include employee entitlements and a provision for contingent liabilities, which will leave Murchison’s available cash post completion at around $223 million - which is higher than the $217 million previously expected.

The majority of the available cash will be placed on deposit.

The Murchison management team has also been downsized and restructured to consist of a small number of key personnel required to operate the company, along with a commensurate reduction in operating expenses.

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