Gindalbie Metals has awarded the magnetite ore mining contract for Stage 1 of its Karara iron ore project in Western Australia to Downer EDI Mining (DEM), a unit of the engineering and infrastructure management services group Downer EDI Ltd. The contract has an estimated value of about A$570 million over a duration of six years and includes provision of drill-and-blast and load-and-haul services. The contract is based on mining of about 20 million mt/y of ore and 10 million mt/y of waste.

The Karara project is located 500 km northeast of Perth and 225 km east of the Port of Geraldton. Ansteel, one of China’s largest steel producers, is Gindalbie’s joint venture partner in the project. Stage 1 of the project calls for production of 2 million mt/y of direct-shipping hematite ore and 8 million mt/y of magnetite concentrate. The project shipped its first direct-shipping ore in March 2011. The magnetite concentrator is scheduled for commissioning during the third quarter of 2012, ramping up to production of 8 million mt/y of magnetite concentrate by year-end 2012.

The DEM contract will employ around 120 personnel and require mobilization of two hydraulic shovels, nine large-capacity ore haulage trucks, drill rigs and numerous items of support equipment. Mobilization of personnel and equipment began in February 2012, and full-scale stripping of the main magnetite orebody was slated to begin soon thereafter. Additional personnel will be mobilized as required throughout 2012, with ore production set to ramp up in line with the commissioning schedule and ore delivery requirements of the Karara concentrator.

Gindalbie Managing Director Tim Netscher said, “The start of open-pit mining will see the beginning of a huge transformation for the Karara site, which includes development of one of the largest open-pits in Western Australia. With the final pit measuring 3 km long, 800 m wide, and 300 m deep, in time the Karara pit will be of a similar size to other large mining pits in Western Australia, including the Super Pit in Kalgoorlie.”

The Karara magnetite deposit has a JORC indicated and inferred resource of 2.5 billion mt grading 35.9% Fe. The resource remains open at depth and along strike. Ansteel holds a 36% equity interest in the project and has a life-of-mine off-take agreement for all Karara production. Stage 1 construction includes infrastructure to support a Stage 2 expansion to 16 million mt/y of magnetite concentrate. Long-term planning envisions eventual expansion to as much as 30 million mt/y.

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