22/07/2008 - 12:03

Gindalbie starts $1.8bn spending spree

22/07/2008 - 12:03

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Perth-based Gindalbie Metals Ltd has started its spending spree for its $1.8 billion Karara iron ore project in Western Australia by placing a $70 million order for key long lead items.

Gindalbie starts $1.8bn spending spree

Perth-based Gindalbie Metals Ltd has started its spending spree for its $1.8 billion Karara iron ore project in Western Australia by placing a $70 million order for key long lead items.

Gindalbie and its joint venture partner, Anshan Iron & Steel Group Corp, have placed equipment orders with Polysius Australia, part of the Germany's ThyssenKrupp group, with delivery expected by March 2010.

The orders are for two high pressure grinding rolls and four large ball mills for the crushing and grinding phase of the process plant.

Earlier this year Gindalbie expanded the scope of its iron ore business with its feasibility study to look at a 12 million tonne per annum start up operation, up from 8Mtpa, at Karara.

Below is the announcement:

Gindalbie Metals Limited (ASX: GBG - "Gindalbie") and its joint venture partner, Anshan Iron & Steel Group Corporation ("AnSteel"), have further reinforced their strong commitment to the timely development of the A$1.8
billion Karara Iron Ore Project in Western Australia after placing firm orders totalling approximately A$70 million
for key long-lead equipment items for the project's construction phase.

The orders represent the first major equipment purchase for the Karara Project and are expected to be followed by
a series of project and contract milestones as the Karara Project moves into the implementation phase.

The Karara Joint Venture has placed firm orders with Polysius Australia, a company of the German-based global
technology group, ThyssenKrupp, for two High Pressure Grinding Rolls (HPGR's) and four large ball mills for the
crushing and grinding phase of the processing facility for the magnetite phase of the Karara Project. The equipment
will be manufactured in Australia, Europe and Asia and is scheduled for delivery by March 2010.

ThyssenKrupp is one of the world's biggest technology groups with sales of more than €51 billion in 2006/07 and a
focus in the areas of steel, capital goods and services. ThyssenKrupp has an existing joint venture with AnSteel in
steel production.

The HPGR units will be equivalent to some of the largest currently being used in Australia, similar to those at the
world-class Boddington Gold Mine in Western Australia's South West.

The magnetite phase of Karara will utilise conventional processing technology comprising primary and secondary
crushing and grinding, followed by magnetic separation to increase the iron grade of the magnetite ore from 36.3%
Fe to a high-grade magnetite concentrate grading 68.2% Fe. This premium export product will be equivalent to
some of the highest grade and best quality hematite ores currently being mined in the world.

Commenting on the announcement, Gindalbie's Managing Director, Mr Garret Dixon, said: "This represents another
important milestone for the Project and demonstrates the confidence that we have in the timely completion of the
approvals process. A commitment to secure these important long-lead items is essential now to ensure that the
project meets all of its critical development milestones, particularly given the extensive lead time required to
manufacture these large items of equipment.

"There is already a large amount of pre-construction activity with the Project and we expect these orders to mark
the beginning of a very busy phase in the second half as we lock away additional contracts and move decisively
towards development," he said.

Other major contracts which are currently being finalized for the Karara Project in coming months include:

- Front End Engineering Design;

- Project Management Consultancy;

- Karara mining contract; and

- Further contracts for crushing and grinding equipment.

Several conditions of the Karara Joint Venture Development Agreement have already been met including the
announcement of a formal Decision to Mine, the equity subscription agreement finalized in February this year for
the A$534 million equity component of the project, and the first two payments totaling $105 million by Ansteel under
that agreement.

Mr Dixon said the orders for the long-lead items reflected the growing momentum behind the Karara Project, with a
series of important project milestones expected over the coming months. "In no particular order, these include
further payments by AnSteel under the equity subscription agreement, finalization of pricing terms for off-take
arrangements, completion of project finance arrangements, exploration results and key infrastructure agreements,"
he added.

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