Shares slump as Murchison fails to secure key funding

'The risks around stage two of Jack Hills is holding some back from buying.' Chris Weston, IG Markets

MURCHISON METALS saw its shares fall close to a six-year low yesterday after failing to get funding for a $5.94 billion iron ore infrastructure project in Western Australia.

Murchison closed at 33?, the lowest since November 23, 2005, making the stock the worst performer on the Australian benchmark index.

Murchison and its Japanese partner Mitsubishi Corporation said last week they were revising their plan for the Oakajee project after failing to secure key agreements. The partners, planning to spend $3.7 billion expanding the Jack Hills iron ore mine, want to develop the Oakajee port and rail project to open up the mid-west region for iron ore exports to Asia.

"There's uncertainty around the Jack Hills project and whilst they are in talks about refinancing and potential relationships with investors, the risks around stage two of Jack Hills is holding some back from buying," said Chris Weston, an institutional trader at IG Markets.

Murchison and Mitsubishi, chosen as developers by the West Australian government instead of a Chinese consortium, have until December 31 to decide on the development.

Construction was scheduled to start in the first quarter of 2012 and port operations to commence in 2015. Murchison declined to comment yesterday.

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