Gindalbie hits environmental hurdles

Aspiring iron ore miner Gindalbie Metals Ltd has disclosed that it may need to modify its start-up mining plans because of environmental issues associated with its $1.8 billion Karara project in the Mid West region.

In an Open Briefing lodged with the Australian Securities Exchange today, managing director Garrett Dixon said the Karara project was largely on track for initial production of magnetite concentrate in 2010.

He also disclosed that the company was facing enviromental issues with the Karara project's start-up phase, which involves mining direct shipping ore (DSO) from a series of hematite orebodies on the Karara and nearby Mungada tenements.

"That DSO phase has been out to public environmental review for a period of time and has received overwhelming public support," Mr Dixon said.

"However, in working with the Government agencies it has become apparent that the tenements which cover the Mungada Ridge present significant environmental impact assessment challenges which may have a short-term effect on the DSO phase.

"In light of this we are continuing to work with the Government agencies for a positive outcome and remain confident of being able to start producing hematite from the Karara Iron Ore Project in 2009.

"However, it may be a case of reaching some sort of compromise regarding those hematite deposits contained within the Mungada Ridge, at least while further studies of the biodiversity of the region are conducted."

Mr Dixon said the initial DSO phase makes up less than 5 per cent of the Karara Iron Ore Project while the magnetite phase, which the Government has already said it is pre-disposed to support, is going to be the company-maker for Gindalbie and deliver significant returns to shareholders.

The company's public environmental review document for the Karara magnetite project is in the final stages of production and is due to be completed within the next two months.