Midwest commences pre-feasibility study on hematite project

West Perth-based iron ore developer Midwest Corporation Ltd will commence a pre-feasibility study of its Weld Range hematite project following the positive outcome of its scoping study.

The full text of a company announcement is pasted below

The Directors of Midwest Corporation Limited (Midwest) are pleased to advise that the company will proceed to the Pre-Feasibility Study for its Weld Range hematite project based on the positive outcome of the recently concluded Scoping Study.

Based on those encouraging results, Midwest, in conjunction with its joint venture partner Sinosteel Corporation, will undertake further exploration drilling and a Pre-Feasibility Study on the Weld Range project.

The board of Midwest has approved a budget of $41.54 million to complete all studies to the completion of a Bankable Feasibility Study of which the first $17 million will be paid by Sinosteel Corporation. The balance of $24.54 million will be paid in equal amounts by the joint venture partners.

Under the Joint Venture Agreement with Sinosteel Corporation, the intrinsic value to be contributed by Sinosteel Corporation to Midwest upon entering into an Operations Joint Venture is to be based on the results of the Pre-Feasibility Study.

In order to accommodate this requirement, the Pre-Feasibility Study will be more detailed than would normally be required.

The Weld Range Pre-Feasibility Study is expected to be concluded in the middle of 2008 and will include the aims of defining in excess of 225 million tonnes of reserves and provide detailed assessment of:

• the proposed products and marketing of those products;
• mining, processing, and associated infrastructure;
• capital and operating expenditure;
• the progress toward completion of feasibility studies for rail and port infrastructure;
• environmental and other approvals; and
• strategies and risk assessment for construction, commissioning and operations of a mining facility.

The Weld Range Scoping Study dealt in detail with resource definition, mining and associated infrastructure, product classification, marketing and risk assessment for the Weld Range project.

The study evaluated the viability of developing the Weld Range hematite iron ore resource at a minimum scale of 15 million tonnes per annum (mtpa) for 15 years. The study confirmed that using the key assumptions, the development of the Weld Range project provides an attractive investment opportunity for the company.

An initial update to the Weld Range resource incorporating drilling results at two of the more prospective deposits, Madoonga and Beebyn, are expected to be complete during May 2007.

Chief executive officer Bryan Oliver said the results of the study were most encouraging and gave Midwest Corporation the confidence to proceed with further resource definition and feasibility studies.

"This is an important milestone for Midwest Corporation and furthers its objective of becoming a world class exporter of iron ore" Mr Oliver said.