Keysbrook costs higher than predicted

Perth-based mining explorer MZI Resources says development and operational costs at its Keysbrook mineral sands project will be higher than initially expected.

MZI expects total development costs at Keysbrook, located 70 kilometres south of Perth, to rise to $73.2 million, up from the $64.2 million that was predicted in Keysbrook’s 2012 feasibility study.

Operating costs have also risen by $6.5 million to $40.6 million.

In an effort to minimise the risk of cost overrun, MZI estimated a high proportion of fixed costs and a higher level of contingency costs than what was predicted in 2012.

MZI chief executive Trevor Matthews said the advancements made to the project had created value for shareholders, as well as de-risked the project and assisted in finalising the financing process.

“We are now at a point where we can confidently proceed with the Keysbrook development with an improved construction contacting strategy, defined commercial arrangements with stronger local relationships and greater upside for shareholders once operations commence,” he said.

The project has a potential 15-year life.