The biggest iron ore producer company of Australian, Fortescue Metal Group Ltd., will expansion of mining exploration. To support expansion plan of mining exploration, the company plans to sell extraordinary share.

Fortescue wants to almost triple output to feed rising demand from steel mills in China and benefit from record prices. The first expansion stage to 120 million metric tons a year may cost $3.9 billion, said Patersons Securities Ltd.’s Alex Passmore.

“The preference shares are a small step in the overall financing,” said Passmore, head of metals and mining research at Perth-based Patersons. “There are a lot of people in the U.S. who would like a 9 percent coupon rate at the moment.”

The company will ask shareholders at a Sept. 30 meeting to vote to change its constitution to allow the sale of the shares, the Perth-based company said today in a statement. It didn’t say how many preference shares it proposed to sell. They will pay a yield of 9 percent and have a term of 8.5 years.

The company has already received a subscription application for shares worth A$140 million ($121 million) as part of the proposed sale, Fortescue said. It didn’t say who had offered to buy the shares.

Limited Rights

The preference shares also have limited voting rights and won’t change the level of control of major shareholders, including Forrest who has 35.8 percent of the company or the Philip Falcone- controlled hedge fund Harbinger Capital Management, which has a 15.8 percent stake.

Fortescue has received $275 million as prepayment for iron ore from five Chinese steel mills, it said today.

The company, aiming to become Australia’s third-largest exporter of the ore, is targeting production this year of 55 million tons this year from its A$2.8 billion Pilbara project in Western Australia state and wants to expand to 160 million tons, and possibly 200 million tons.

Find More Other News : Company, Exploration, Iron Ore, Mine Trade & Market, Mining Finance, Mining Investment, Mining Top News