Hematite Phase
Overview
The Karara Iron Ore Project incorporates numerous Direct Shipping Ore (DSO) hematite deposits. Gindalbie and Ansteel are working towards commencing production of DSO quality hematite at an initial rate of 2Mtpa in the second half of 2009. DSO quality hematite will be initially transported to the Port of Geraldton via road and rail and then rail only once the adjacent magnetite phase is commissioned.
Key Project Metrics
• Resource – 16.2Mt at 61.7% Fe (Indicated & Inferred)
• Ore Reserves – 10.9Mt at 61.7% Fe (Probable)
• Lump: Fines Ratio = 60:40
• Initial production of 2Mtpa of DSO from 2009
• 6-year mine life based on initial reserves
• Off-take guaranteed by Ansteel
Bankable Feasibility Study
Gindalbie announced the results of a positive Bankable Feasibility Study (“BFS”) on the hematite phase of Karara in September 2007, confirming the economic and technical viability of the project. The BFS contemplates:
• a conventional 2Mtpa open pit operation generating lump and fines hematite products for Ansteel;
• transportation of hematite products to the Port of Geraldton via road (existing 85km haul road to Morawa) and then rail (existing 200km rail line from Morawa to Geraldton) for the first 12 months of operations;
• transportation of hematite products to the Port of Geraldton via rail only once the adjacent magnetite phase commences operation in 2010; and
• hematite to be shipped to China via a storage and loading facility which will be integrated with the expanded Berth 5 ship loading facility at Geraldton.
First production of products from the hematite phase of the Karara is scheduled for the second half of 2009.
The key financial outcomes of the hematite phase BFS were:
• estimated total Project Capital Costs of A$108.1 million;
• NPV10% after tax of A$79.6 million and IRR after tax of 27.5%; and
• free cash flow after tax of A$184 million.