GWR Group has joined a growing list of companies aiming to start small iron ore mines in WA, after signing a term sheet with contractor Pilbara Resource Group.
The agreement sets out the key terms for developing stage one of GWR’s C4 deposit, which is part of the much larger Wiluna West project.
PRG will undertake all aspects of the operation from pit to port, starting with construction of a haul road and other infrastructure.
It will also provide its own project capital and in return will be entitled to a 30 per cent profit share.
This is subject to the two companies negotiating formal contract documentation.
The C4 deposit contains 21.6 million tonnes of iron ore, grading 60.7 per cent iron.
Stage one will target a 500-metre strike length of outcropping high-grade direct shipping ore.
The plan is to truck the ore to the port of Geraldton.
GWR chairman Gary Lyons said the term sheet, along with the recently announced mining approvals, represented a major milestone.
“The company aims to take advantage of the current strong iron ore prices,” he said.
PRG managing director Scott Dryland said the GWR project added to a record year for the contractor.
“With mining approvals for Wiluna West now in place, there is a window of opportunity to hit the ground running on this project,” he said.
In conjunction with Dryton Minerals, PRG has just completed a 300,000-tonne project at the Spinifex Ridge iron ore deposit for Brisbane-based Young Australia Mines (formerly Moly Mines).
This involved the processing of low-grade ore that was stockpiled at Spinifex Ridge.
Young Australia Mines said it sold the ore for $7 per tonne under a mine gate sale agreement.
Mr Dryland said this demonstrated PRG’s ability to deliver bespoke mining solutions.
“We have a flexible, high-performance workforce that is experienced and ready to go,” he added.
Other companies looking to start small iron ore mines in WA include Fenix Resources, Coziron Resources, Strike Resources and Grange Resources.
The most advanced is Fenix, which yesterday announced the appointment of former MACA managing director Chris Tuckwell as general manager operations.
Mr Tuckwell will be responsible for the development of the Iron Ridge DSO iron ore project.
Fenix said the development of Iron Ridge was on track to commence later this year with first shipments due in early 2021.
The project has estimated capital costs of $11.4 million and plans to produce 1.25 million tonnes pa.