MAC: Mines and Communities

Global finance crisis hits mine projects in Peru

Published by MAC on 2008-09-29
Source: Reuters

Funding for two iron ore projects in Peru has been delayed because ofthe global financial crisis, Australian miner Strike Resources Ltd said on its website on Wednesday.

The announcement is the clearest sign yet the acute credit crisis in the United States is having an impact on funding for small miners in Peru, a top global minerals producer.

Gallagher Holdings Ltd, the investment company of Russian metals billionaire Alisher Usmanov, said in July it would buy $100-million Australian dollars worth of stock in Strike Resources - in two parts. The first phase, for 18,1-million shares and valued at A$49,7-million, was completed.

But the second phase, for 19,4-million shares or A$53,4-million, is not proceeding "as a result of the uncertainty created by the international financial crisis," Strike said.

Funds from Gallagher were to go toward developing the Apurimac Ferrum and Cuzco Lamp iron-ore projects in Peru.

Strike said Gallagher wants to make further investments in the company and will negotiate to replace the funds with an "alternative investment mechanism."

Maxwell Hobson, the company's director for the Apurimac and Cuzco projects, said they would still proceed.

"As far as we're concerned here, nothing has changed with the project," said Hobson.

Global iron-ore prices have quadrupled in the last five years as China, a major steel producer, buys more of the raw material.


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