Monday, 07 January 2013 10:06
Sydney-based WPG Resources has announced its $3 million prefeasibility study (PFS) for the Giffen Well iron ore project in South Australia was progressing as planned and was expected to be complete by the end of March.
WPG has the right to earn an 82 per cent interest in the Giffen Well tenement and potentially a 100 per cent interest, by meeting the commitments that were summarised in company announcements released in January and November of last year.
The integrated project has been designed to meet the capacity of existing infrastructure, wherever possible. This would keep a cap on capital expenditure and help make the project’s development more affordable.
Thirteen million tonnes per annum of magnetite iron ore will be mined to produce 5 mtpa of 68.5 per cent iron concentrate with low levels of impurities. The plant will also produce a haematite concentrate in early years while the oxide zone is mined.
The colliery will produce 400,000 tonnes per annum of sub-bituminous black coal that will be fed to a 90-100 megawatt mine mouth power station that will produce low cost electric power for use at Giffen Well.
The current resource estimates at Giffen Well can support a 30 year project life.
“There is little doubt that the project is technically feasible,” WPG executive chairman Bob Duffin said.
“We are now focusing on optimising the cost estimates. I’m confident that the operating costs will be broadly in line with our published estimates for Peculiar Knob, which we sold as part of a package of assets to OneSteel (now Arrium) for about $320 million in 2011, and which is now in production.
“We have further work to do on the capital cost, but we expect this to be in the order of $300 million per annual tonne of iron ore concentrate. There is scope to make major reductions in the capital expenditure budget by outsourcing the power station and Port Pirie facilities to service providers, but our base case assumes all fixed assets are funded and operated by WPG.
“These estimates will be fine-tuned as the PFS approaches completion later this quarter,” he said.
Mr Duffin said the unit revenues from Giffen Well would be higher than those for Peculiar Knob due to the higher iron grade and lower levels of impurities.
In December 2012 the South Australian Government renewed the term of the Giffen Well tenement for a further period of three years. The government has also renewed the period for which WPG’s rights to complete development of its Port Pirie assets applies, which now extends to August 2015.
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