The government of Western Australia has granted Murchison Metals Ltd (ASX: MMX) and its partner in the Oakajee project, Mitsubishi Development Pty Ltd, an extension to the state development agreement (SDA).

The companies requested the extension following their announcement of revised project schedules for the Oakajee infrastructure project and proposed expansion of the Jack Hills iron ore project on 4 November 2010.

Murchison and Mitsubishi each hold a 50 percent interest in the projects through their jointly owned Oakajee Port & Rail (OPR) and Crosslands Resources Ltd (Crosslands) businesses, respectively.

The SDA executed in March 2009 specified 31 March 2011 as the “sunset date” for execution of detailed “implementation agreements” for the port and rail infrastructure projects. These implementation agreements will set out the specific responsibilities of the parties in relation to development of the projects.

The government announced today that it has agreed to extend the date for execution of the implementation agreements from 31 March 2011 to 31 December 2011. The parties will now proceed to finalise the documentation to give effect to the extension.

Notwithstanding the extension, Murchison and Mitsubishi said they aim to complete the implementation agreements as soon as possible.

Murchison also confirmed that completion of bankable feasibility studies for both the infrastructure project and Jack Hills Expansion Project (JHEP) is targeted for the June Quarter 2011, in line with the revised project schedules announced on 4 November 2010.

First shipments of ore through the new Oakajee Port are expected in late 2014 or early 2015.

Welcoming the state government’s decision, Murchison Executive Chairman Paul Kopejtka said the extension would ensure optimum progress is maintained at both the Oakajee and JHEP projects.

“These are world scale projects that are pivotal to the unlocking of the mineral riches of WA’s mid-west and we are committed to seeing them developed in the best interests of everyone involved – the Government, the miners and the people of Geraldton and the mid-west,” said Mr Kopejtka.

“Our teams at Crosslands and OPR are working hard, and with great confidence, to complete the feasibility work so that project financing and construction can follow as soon as possible thereafter.

“The certainty provided by this extension will greatly assist in delivering these vital projects in the most timely and optimum manner.”

The state government’s decision to extend the date for execution of the implementation agreements means that OPR retains the exclusive right to develop the infrastructure project.