UPDATE: Resourcehouse Says China Banks To Support Coal Project

Privately-held Resourcehouse Ltd., controlled by Australian mining billionaire Clive Palmer, said Friday it has received a letter of support from Chinese banks interested in backing its A$7.5 billion thermal coal project in Queensland.

Palmer, who is chairman of Resourcehouse, declined to comment on plans to float the company on the Hong Kong exchange in a US$2.5 billion initial public offering that is due later this month, according to a person familiar with the situation.

The mining magnate signed a memorandum of understanding in May with Metallurgical Corp. of China Ltd., or MCC, that will see the Chinese group develop the Queensland coal project and arrange 70% of project costs through debt financing.

The deal will see MCC take a 10% stake in the project and has committed to buy 30 million of the 40 million tons a year that the mine is slated to produce, and Palmer said a Hong Kong listed power company has now been lined up as the end user of the coal, although he declined to name the company.

MCC President Shen Heting has delivered a letter of support from Chinese banks for the project, dubbed "China First" by Palmer, and will visit the project site this weekend.

"This is a most significant day for the China First project when someone of the stature of Mr Shen comes to Australia to personally deliver a letter of support for the project from the Chinese banks," Palmer said.

MCC is also partnering Palmer's Australasian Resources Ltd. (ARH.AU) in an iron ore project in the Pilbara region of Western Australia and the magnate said there are also talks underway on possible cooperation on another iron ore project in the region.

"That would involve financing, probably, from China as well and offtake," he said.

Palmer hopes to start construction on the China First coal project in 2010 and to begin mining in 2013.

The development, which was this week granted Major Project Facilitation status by the Australian Government, will include a 490-kilometer heavy haul railway line and a 40-million-ton, two-berth export coal terminal at Abbot Point.

Palmer also owns the Yabulu nickel refinery, which he purchased from BHP Billiton Ltd. (BHP.AU) in July, and he had been tipped as a possible bidder for BHP's Ravensthorpe nickel laterite mine, which had supplied some of the feedstock to the Yabulu plant.

However, Palmer said Friday he is not interested in buying the Ravensthorpe operation in its current form and can replace the material from Ravensthorpe with nickel from Papua New Guinea.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; [e-mail]