26/06/2008 - 11:23

Grange green lights Malaysian iron mine

26/06/2008 - 11:23

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Perth-based Grange Resources Ltd is set to step into the producer ring later this year following joint venture approval to develop an iron ore mine in Malaysia.

Grange green lights Malaysian iron mine

Perth-based Grange Resources Ltd is set to step into the producer ring later this year following joint venture approval to develop an iron ore mine in Malaysia.

The company holds a 51 per cent interest in the Bukit Ibam magnetite mine, while the remaining interest is held by privately owned Malaysian company, Esperance Mining Sdn Bhd.

Initial production at the mine, which historically produced 22 million tones of iron ore before its closure in 1970, is pegged at 100,000 tonnes per year of magnetite concentrate.

Grange said the concentrate will be sold on the spot market. Capital expenditure for Grange will be $1 million and operating costs are around $A50 per tonne.

All approvals are in place and the preparation of the mining pit is scheduled for September while the concentrator is forecast to be commissioned by the end of the year.

Full announcement below:

Following successful resource drilling, metallurgical test work and viability studies Grange Resources Limited (ASX code: GRR) is pleased to announce Joint Venture approval to develop the Bukit Ibam magnetite mine in Malaysia. The initial production rate will be 100,000 tonnes per year of magnetite concentrate and production will commence by the end of 2008. The concentrate will have a grade of ~60% Fe and will be sold on the spot market and shipped out of Kuantan Port.

All statutory approvals for the project are in place and work has commenced on procurement and construction. The pit has been prepared for mining which is scheduled to recommence in September and the concentrator is forecast to be commissioned by the end of 2008.

The Bukit Ibam Project is located at the former Bukit Ibam iron ore mine, in Pahang State, Malaysia. The mine operated from 1962 and produced approximately 22 million tonnes of haematite and magnetite ore before closure in 1970. Grange Minerals Sdn Bhd, a wholly owned Malaysian subsidiary, holds 51% project equity in a joint venture with a privately owned Malaysian mining company, Esperance Mining Sdn. Bhd.

A measured, indicated and inferred resource of 831,000 tonnes grading 36.7% Fe as previously reported will provide a mine life of approximately 3 years, with potential expansion and mine life extension opportunities available from existing low grade stockpiles and tailings dams nearby. These will be fully investigated as the initial mining takes place. Grange continues to look for other iron ore opportunities in the area.

Capital expenditure for Grange will be A$1m and operating costs per tonne of concentrate produced will be ~A$50/tonne.

Russell Clark, Managing Director of Grange Resources, said "this development makes Grange an Operator and a Producer in Malaysia. The payback on capital is rapid and we look forward to capitalising on the current high iron ore prices to generate quick positive cashflow. The opportunity to expand in the near future is very real and we will be looking very hard at this with our joint venture partners. Bukit Ibam is a key part of the Grange strategy to generate funds and develop an increasing mining and exploration presence in Malaysia."

As part of the much larger Southdown project Grange proposes to construct and operate an iron ore pellet plant at Kemaman in the neighbouring state of Terengganu. An operational presence at Bukit Ibam and in Kuantan will provide some synergies and help facilitate early development work at Kemaman.

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