20/04/2010 - 09:49

BC Iron awards $300m contracts to Watpac

20/04/2010 - 09:49

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Pilbara iron ore hopeful BC Iron has awarded Brisbane-based Watpac construction and services contracts, valued at more than $300 million, at the Nullagine joint venture.

Pilbara iron ore hopeful BC Iron has awarded Brisbane-based Watpac construction and services contracts, valued at more than $300 million, at the Nullagine joint venture.

The contracts include the mining, crushing, and screening activities at site, and a haul road construction project.

BC Iron managing director Mike Young said the contracts were crucial to the long-term success of the Nullagine JV as it gears up to start first production later this year.

"Our first production target is approaching so we are seriously focused on ensuring that all of our long lead-time contracts are secured ahead of a tightening mining services market," said Mr Young.

"The heavy haul road and the mining, crushing and screening contracts are among the most critical in terms of meeting our production timelines, so securing these now was very important."

Watpac managing director Greg Kempton said getting the projects in the Pilbara region was a significant milestone.

"The Nullagine Iron Ore Joint Venture project is indicative of the impressive growth in the scope and complexity of the mining projects undertaken by Watpac in recent times," Mr Kempton said.

"It is also demonstrative of the success of our capital-raising venture in late 2009, which has allowed us to pursue a much wider range of projects in this sector."

"For Watpac, this is a rewarding opportunity to work with a publicly-listed client, with similar aspirations to ourselves, and the corporate governance that goes along with being an ASX-listed company."

Over the next month, project commencement details will be confirmed by both parties.

The haul road contract involves the construction of a 55km haul road between the mine site near Nullagine and the Fortescue Metals Group rail line at its Christmas Creek operation.

Work on the haul road is to commence in June and be completed prior to Christmas this year.

The mining contract commences in September.

The contract is a five-year term with initial production around three million tonnes per annum (mtpa) and ramping up to 5mtpa during the contract.

The Nullagine project is operated under a joint venture agreement between BC Iron and Fortescue Metals Group, with BC Iron being the manager of the joint Venture.

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