Aquila's West Pilbara Iron Ore project is one step closer to the go-ahead, with a positive result evolving from its definitive feasibility study of Stage 1 of the project.
Aquila's West Pilbara Iron Ore project is one step closer to the go-ahead, with a positive result evolving from its definitive feasibility study of Stage 1 of the project.
The study results announced today put a total $5.77 billion price tag on the initial 30 million tonnes a year operation, including $1.8 billion for mining and processing infrastructure, $1.7 billion for a standalone railway and rolling stock, and $1.4 billion for its own dedicated port at Anketell Point.
Despite coming in almost $2 billion above initial scoping study estimates, Aquila said the project was forecast to generate an internal rate of return of 16.4 per cent and annual pre-tax profits of $1.8 billion, based on expected production costs of just $19.48 per tonne.
Aquila said it had not yet factored in the impact of the planned 30 per cent Mineral Resource Rent Tax on iron ore profits. It said its infrastructure costs could also decline if Fortescue Metals Group and China Metallurgical Corp chose to participate in the Anketell port.
A $400 million budget for the current financial year work program is awaiting approval from Aquila and its joint venture partners with the commencement of the project outlined for March quarter 2012 with first shipments in the March Quarter 2014.
Prospects for the project are promising, with Aquila outlining it has a substantial presence in the Pilbara region, with access to approximately 9,400km2 of tenement area either granted or under application with an established Measured, Indicated and Inferred Resource of 742 million tonnes.
The mine plan developed in the DFS has identified a Mineable Resource of 352 million tonnes
from the 501 million tonnes of Channel Iron Resource within the Stage 1 development area, with
an estimated 12 years production from this Mineable Resource.
Whilst initial exploration has focused on some 2,570km2 of tenement area, there remains a
further 6,840km2 which is highly prospective for both Channel Iron and Bedded Iron deposits.
The capital cost estimate has been assembled with the major contractors including Worley Parsons for infrastructure, Calibre and Engenium for rail facilties and AECOM for marine facilities.
The company has outlined opportunities for other service providors in port, rail and mining opportunities for contractors leasing equipment.
Market support for the proposed product has been strong with 32 Memoranda of Understanding
signed with Chinese, Japanese and Korean steel mills. All test work to date has indicated
potential for up to 20% of sinter feed to be made up of Project ore, while maintaining current
sinter productivity and quality.
The Company has recently signed an MOU with China Development Bank Corporation to pursue mutually beneficial opportunities for the funding of, and investment in the Project.
The latest study builds on the pre-feasibility study released in May 2008 and is based on a 282km railway to an independent port development at Anketell Point.
The Mine and Rail Public Environmental Review has been released for public comment and a
Public Environmental Review document for the port development will be submitted this month to
the Environmental Protection Authority for approval for public release.
