Tuesday, December 6, 2011

Hiap Teck rises on Eastern Steel's iron ore mining licence

KUALA LUMPUR (Dec 6): HIAP TECK VENTURE BHD [] shares advanced on Tuesday after its 55% owned Eastern Steel Sdn Bhd had been granted a mining licence by Trengganu state government to mine iron ore on the area of 600 acres near Bukit Besi.

At 9.20am, Hiap Teck added three sen to 91 sen with 714,100 shares traded.

The mining concession would allow Eastern Steel to mine the area, which has estimate reserve of 40 to 50 million ton of iron ore, until the end of its mining life.

RHB Research in a note Tuesday said that this was positive development, as an iron ore mine concession will be a good fit to Hiap Teck's blast furnace project and help to lower its cost of production.

'However, we believe it is premature to reflect this in our forecasts as official geology studies detailing estimated reserves and resources of the concession will be needed before any reliable estimates can be made.

'In any case, the iron mine concession will only start to contribute to earnings when the blast furnace project is completed by 2014,' it said.

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