Gindalbie Metals says its Karara iron ore development has made a significant step towards full-scale production after awarding mining contractor Brierty a $185 million contract for hematite mining services at the Mid West project.
Brierty will undertake direct shipping iron ore mining services operations at Karara's Blue Hills North and Terapod deposits, including drill and blast, load and haul, crushing and screening and road haulage for approximately four years.
The contract also covers train loading activities of both hematite ore and magnetite concentrate at the Karara rail loop for the duration of the contract.
First mining is scheduled to commence in June.
Gindalbie managing director Tim Netscher said the contract was an important milestone in the ramp-up of Karara to production, following the first iron ore shipment from the project in March.
It expects to ramp-up to an initial hematite production level of up to 2Mtpa (million tonnes per annum) next year, along with an 8Mtpa magnetite iron ore operation at Karara as part of stage one of the project.
The Karara rail loop is currently being built.
"Establishing our hematite mining business at this time allows us to begin early testing of important components of our production and shipping system, while also gaining valuable cash flow during our capital expenditure phase," Mr Netscher said.
Another major contract for the main magnetite mining operations is also currently in the advanced stages of negotiation, Mr Netscher said.
At close of trade today Gindalbie and Brierty's shares were steady at 94.5 cents and 27.5 cents, respectively.
