08/10/2007 - 13:32

Aurox expects $603m cost for Pilbara iron, vanadium project

08/10/2007 - 13:32

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Aurox Resources Ltd has estimated capital costs of $603 million for its wholly owned Balla Balla iron ore project in Western Australia's Pilbara region with the release of its bankable feasibility study today.

Aurox expects $603m cost for Pilbara iron, vanadium project

Aurox Resources Ltd has estimated capital costs of $603 million for its wholly owned Balla Balla iron ore project in Western Australia's Pilbara region with the release of its bankable feasibility study today.

Of this, about $158 million will be used to construct a slurry pipeline to transport concentrate between the mine and a new multi-user export terminal at Port Hedland. That is about twice the amount it had ealier forecast.

However, Aurox is gaining from substantially increasing the scale of its Balla Balla project. The explorer was originally proposing to process 3 million tpa at a capital cost of $240 million.

But it revised its production figures up to 6 million tpa. The company last week revealed it would ramp up production to 10 million tpa by 2014.

Aurox's bankable feasibility study reveals the project will generate annual revenue of $418 million and earnings before interest tax depreciation and amortisation of $216 million.

Total operating costs are estimated at $30.40 per tonne of iron concentrate.

The estimates assume an average iron ore sales price of $US107.5 per dry tonne and an Australian dollar foreign exchange rate of 80 US cents over a 12-year project life.

Last week Aurox revised a long term sales agreement with RockCheck Steel Group Co. Ltd, increasing its commitment from 3 million tpa to 7 million tpa within five years of commissioning the Balla Balla mine.

The RockCheck contract followed at 3 million tpa sales agreement struck with Chengde Iron & Steel Group, which Aurox will uplift total annual production and sales of Balla Balla iron concentrate to 10 million tonnes by 2014.

The ore reserve estimate at Balla Balla is 103.8 million tonnes, grading 45.7 per cent iron and 0.63 per cent vanadium oxide.

Shares in Aurox were one cent, or 0.84 per cent, higher to $1.195 at 1453 AEST.

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