Iron Ore Holdings had mixed news for shareholders yesterday, with lower costs likely to bolster its major project but heritage issues causing delays at a second project involving Mineral Resources.
Iron Ore Holdings had mixed news for shareholders yesterday, with lower costs likely to bolster its major project but heritage issues causing delays at a second project involving Mineral Resources.
Managing director Alwyn Vorster said IOH was looking to shave 5 to 10 per cent off the capital and operating costs at its Buckland project, which has previously had an $800 million price tag.
Mr Vorster said that reflected the competitive contractor market and some optimisation by IOH, which is 80 per cent through a feasibility study based on annual production of 8 million tonnes for 5 years.
Lower costs are likely to make the project more attractive to potential partners, with IOH aiming to lock in a deal next year.
“We have identified a number of very credible Australian and overseas interested parties from a wide range of areas, mining companies, logistics companies, private equity companies,” Mr Vorster said.
“We are currently as a board considering all our options.”
The news was not so positive for the smaller Iron Valley project, which is about six months behind the original schedule.
Mr Vorster acknowledged yesterday that progress had been slower than anticipated, following the signing in February of a mine gate sale agreement with miner Mineral Resources.
Speaking after the annual meeting, he said IOH had completed all primary approvals, adding “there is nothing stopping them from starting construction”.
However, IOH had found “two very small sites” with artefacts and therefore needed to complete further secondary heritage approvals.
Once that was done, it would trigger a 6-month timeline, after which MinRes would be required to start making specified payments.
“Once we trigger that early next year, six months after that, there will be a safeguard that we must receive minimum payment,” Mr Vorster said.
He said continued studies on the project’s logistics solution was another reason for the delay.
“They want to clarify a very important part of their logistics chain before they actually start construction, because that will impact the scale of their construction at Iron Valley,” Mr Vorster said.
“It could be much larger than we thought before.”
Mineral Resources chairman Peter Wade told Business News yesterday the company was evaluating a number of locations for a trans-shipping operation.
“That would certainly mean the logistics limitation will be partially removed,” he said.
“If we can get more tonnes through our port solution, we would certainly move more tonnes through our mines, and that includes Iron Valley.”
IOH is also plannning a trans-shipping operation for the Buckland project, using similar technology to that employed in South Australia.
Another limitation facing Iron Valley is the lack of a rail option to port and Mr Wade said that was unlikely to change.
“There is nothing there in the short term that will change the initial thinking that we will use road.”
MinRes already uses quad road trains to transport ore from its nearby Phil’s Creek mine to Port Hedland, and Mr Wade maintained trucking was a “very viable alternative”.
The likely annual production from Iron Valley has never been specified; however IOH has previously used production of 4-6 million tonnes to indicate the potential value of its mine gate sale agreement.
Mr Wade told shareholders at last week’s MinRes annual meeting that the company anticipated total exports of 8mt in the current financial year, with just more than half from its Carina mine in the Yilgarn.
He also said the company was expecting first production from Iron Valley early in the 2014-15 financial year.
