$15m sought for new mine

TWO Perth mining entrepreneurs are canvassing private investors and iron ore buyers for up to $15 million to start development of the Kimberley’s first onshore iron ore mine.

Unlisted Applecross mining junior Kimberley Metals Group, run by former Australasian Resources managing director Darren Hedley and Kambalda nickel entrepreneur Ian Junk, hopes to start mining at its Ridges iron ore project, 165 kilometres south of Wyndham, by April next year.

The project would be the first iron ore mine established on the Kimberley mainland, with Cliffs Resources’ Cockatoo Island mine and Mt Gibson Iron’s neighbouring Koolan Island mine in Yampi Sound currently the only producing iron ore projects in the region.

Discovered more than 50 years ago, the deposit is estimated to host a combined magnetite and hematite resource of 67 million tonnes averaging 43 per cent iron, including 5.7mt of high-grade hematite averaging over 59 per cent iron.

A recently completed feasibility study indicated the project could initially produce at least 1.5mt of high-grade ore annually, which would be trucked to Wyndham for export.

Total development costs are estimated at $30 million, with an additional $10 million in working capital required to cover commissioning through to the first shipment of iron ore.

Earlier this year, KMG secured a $28 million project facility with Macquarie Bank, which was subsequently granted a charge over the project in August.

To raise the additional funding required to proceed, the company has issued an information memorandum seeking up to $15 million “via equity placement or prepayment for guaranteed offtake commitments”.

It is understood the company is also canvassing select private investors to participate in the capital raising, which would equate to a 15 per cent stake in the company.

According to the memorandum, the project is expected to generate annual pre-tax earnings of between $43 million and $75 million based on forecast production costs of $30-$50 per tonne.

Mr Hedley, KMG’s executive director, could not be reached for comment.

However, the project has already cleared several major hurdles.

In April, it was cleared by WA’s Environmental Protection Authority, while in June the federal environment department ruled the development was not a controlled action.

The company has also secured a site at Wyndham port for a barging facility to transfer ore from the jetty to 60,000t bulk carriers moored 1.2km offshore in the Cambridge Gulf.

Chinese industrialist Yanhui Liu, owner of Dalian-based alloys manufacturer Bolong Industry Investment Company, is one of KMG’s six shareholders. Mr Hedley and Mr Junk are also major shareholders.