09/01/2009 - 10:03

Minemakers sign rail link deal

09/01/2009 - 10:03

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Minemakers expects to substantially lower operating costs and increase planned production for its Wonarah phosphate project in the Northern Territory after it entered into a study deal over a rail link to the tenement.

Minemakers sign rail link deal

Minemakers expects to substantially lower operating costs and increase planned production for its Wonarah phosphate project in the Northern Territory after it entered into a study deal over a rail link to the tenement.

The company has signed a memorandum of understanding with Australian Transport and Energy Corridor over an economic study of a 250 kilometre open access standard gauge rail link to connect the project to Tennant Creek.

Under the deal, Minemaker will contribute no more than $30,000 towards stage one of a feasibility study, which will be managed by ATEC and is expected to be completed by the end of May.

Should stage one prove the economic viability of the rail link, stage two is planned to be a more detailed assessment in preparation for a formal submission to governments.

Following on from that, ATEC will manage approvals, funding and construction, and Minemakers will have the right to subscribe for up to 25 per cent interest in the entity operating the rail link.

"The terms of the contract for haulage of Minemakers' freight will be a key aspect of proving the financial viability of the Wonarah rail corridor," the company said.

"The negotiation process will aim to strike an appropriate balance between sufficient freight revenue to justify construction of the railway by ATEC, and for significant operating cost savings to Minemakers with potential to satisfy its future production expansion aims."

Minemakers was previously considering transporting phosphate by road haulage, however the new rail deal could see the company expand beyond the 3 million tonne per annum production limit.

The company is targeting first production later this year after a study pegged capital costs at around $100 million and operating costs at $150 per tonne.

Final costs will be determine after the receipt of results from current and planned drill programs.

Shares in Minemakers were up six cents to 74c at 12:12 AEDT.

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