Home' Australian Resources and Investment : March 2016 Contents 6 • Australian Resources and Investment • Volume 10 Number 1
people mainly slept under the stars in
their sleeping bags.
In 1992, when we took on the Roy
Hill tenements dropped by then iron
ore leader BHP, I was the youngest in
the company and had just taken on the
responsibility of Chairmanship.
Against advice, Hancock Prospecting
[HPPL] applied for Roy Hill and took
huge risks on Roy Hill. Staff were
saying, ‘Don’t do it’. Those involved in
our company back in 1992, and our
external consultant also, thought taking
on Roy Hill was the wrong decision.
They advised in writing not to take up
Roy Hill. One key report after reviewing
BHP exploration results recommended
against it, saying, ‘Without the presence
of the Mount Newman Member formation
of significant high-grade mineralised
bodies is generally precluded ... and ...it
is recommended that these areas not be
considered for acquisition’. Another said,
‘It is considered unlikely that mineable
amounts of high grade ore can be found’.
After all, not only was the company
group short of money for such a
substantial undertaking, but also when
the most knowledgeable company in
iron ore in the Pilbara had decided that
the Roy Hill area was not of value, after
their own initial exploration, you can
understand why professional people
had their reservations. But I shared
my father’s vision and desire for
Fortunately for us, BHP’s exploration
program hadn’t been successful, with their
limited drilling not hitting the right areas.
The exploration program was
financed by a trickle of money from
our company to carry out as much
work as we were able to do with very
limited funds, and eventually Hancock
prospecting discovered the deposits that
this great project is based on today.
Unlike what many in media choose to
portray, money doesn’t just fall from the
sky, even when a tenement is granted – it
takes years of work and effort, increasing
years, to get through increasing
government approvals permits and
licences, and massive risk investment,
and usually major borrowings.
After more successful exploration,
we recognised that for a project like Roy
Hill, to be able to support infrastructure
for its tonnage over approximately
300 kilometres, a mega project would
be required. And for a project the size of
Roy Hill, the banks would prefer to see
us with partners of substance.
We achieved such partners, partners
who, like us, took on still significant
risk, given this project was mainly a
greenfield project, plus all the risks
a mega project involves, including
government approvals risks.
Our partners, Marubeni Corporation,
POSCO and China Steel, also committed
to be customers with over 50 per cent
of Roy Hill’s 55-million-tonne output
committed to them. I would like to
acknowledge our partners, some of
whom are here tonight, and thank them
for their unwavering excellent support.
Usually companies that take on such
investments and commitments are
much larger than our private company –
but the banks supported me.
Our mega financing with 19 of the
world’s largest banks, including the
11 largest banks in the world, and five
ECAs, gained international acclaim,
winning a number of financing awards.
Tonight, I am joined by the
hardworking Roy Hill CFO, Mr Garry
Korte, who will talk about our record-
breaking financing, which was so critical
to enable the development of the project.
Please welcome Garry.
Mr Garry Korte
Firstly, I would like to acknowledge
and pay tribute to Mrs Rinehart for
the incredible work that she has done
over 20 years to overcome so many
challenges to develop the Roy Hill
project to where we are today. Without
your efforts, there would be no Roy Hill.
Although I have only been on board for a
comparatively short period, it has been
an exciting journey.
The US$7.2 billion debt financing,
as many probably already know, is the
largest project financing for a largely
greenfields mining development in the
world. As I found out, there is a good
reason something is a first... It was
pretty tough to get the deal over the line,
and it took about two years of blood,
sweat and some tears before it finally
closed in April 2014.
To make it harder still, we were racing
against the clock to get the project
financed and built, after a competitor
had caused delays with rail route access
across their tenements. This meant that
we didn’t have the luxury of the usual
approach where the full equity and debt
funding package is put in place before
any substantial work commences.
The partners were faced with the
challenge and substantial risk that they
would need to start building using their
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