Gindalbie Metals doubles resource at Karara

August 4, 2008

August 4th (Mineweb) – Gindalbie Metals Limited (ASX: GBG – “Gindalbie”) is pleased to announce a further substantial increase in the magnetite resource for its Karara Iron Ore Project in Western Australia to 1.853 billion tonnes grading 35.4% Fe.  

In addition, a revised Probable Ore Reserve, taking in an updated pit design containing 522 million tonnes grading 36.3% Fe is also announced.

The revised Mineral Resource and Ore Reserve inventory confirms the status of Karara as one of the largest undeveloped orebodies in Australia, capable of supporting a world-class, long-life operation. 

The total Indicated and Inferred Resource as at August 2008 represents a doubling of the previously announced Indicated and Inferred Resource of 929 million tonnes at 36.3% Fe announced in September 2007.

It is important to note the revised Ore Reserve is contained within a pit designed around the original project start up parameters of producing 8 million tonnes per annum (Mtpa) of high grade magnetite concentrate over a 25-year period. Gindalbie has now started work on a new pit design to define larger ore reserves to support increased production levels such as the proposed expanded production rate of 12Mtpa currently being studied.  

The updated Mineral Resource inventory follows the completion of over 31,300 metres of drilling in 223 drill holes. Sampling included 15,652 Head Assays and 5,541 DTR Assays.

The drilling has continued to demonstrate the robustness, consistent grade and quality of the magnetite orebody at Karara, which is being developed by Gindalbie and its 50% joint venture partner Anshan Iron & Steel Group Corporation (“AnSteel”). The substantial increase in the Resource is in large part due to depth extensions, with most of the resource model now extending to a depth of 600 metres below surface (previously 350 metres depth). Importantly, the 1.853 billion tonne resource is in excess of 75% in the Indicated category.  

This update represents the fourth increase in the Mineral Resource inventory for the magnetite deposit at Karara since exploration commenced in May 2005. In addition, recent drilling and ground survey work has confirmed the potential for further significant additions to the resource inventory, confirming the continuity of the deposit along strike.

The updated Mineral Resource estimate was calculated by CSA Consultants and is set out in Table 1 below:  

Table 1:     August 2008 Karara Magnetite Deposit: Resource Classification
Resource Classification Mt Fe % SiO2 % Al2O3 % P % LOI %
Indicated 1,417 35.5 43.2 1.25 0.09 -0.58
Inferred 437 35.1 43.9 1.44 0.09 -0.71
             
Sub Total 1,853 35.4 43.3 1.29 0.09 -0.61
Resources have been estimated for Oxide, Transitional and Fresh material separately. Material types have been combined in Table 1.

Resources are reported exclusive of Reserves defined within the July 2008 Open Pit design.

 

Reporting of Resources and Reserves is compliant with the standards and recommendations outlined in the Australasian Code for Reporting of Mineral Resources and Ore Reserves (2004), prepared by the Joint Ore Reserves Committee (JORC).

The remodeled open pit design consists of five stages of development, sequenced to minimize waste removal and produce consistent grade and volume of concentrate. The remodeled pit design contains 5% more Probable Reserve, produces 7% more concentrate and requires significantly less waste removal than the original September 2007 pit design. The waste to ore ratio has now fallen to 0.34:1 from the previous 0.42:1 in the September 2007 design. Importantly, the remodeled design has demonstrated the production schedule to be robust at mining rates of both 20Mtpa (8Mtpa concentrate) and 30Mtpa (12Mtpa concentrate).

Table 2:      Karara Magnetite Pit Tonnage  –   August 2008
Pit Design Mt Fe % SiO2 % Al2O3 % P % LOI %
Ore 522 36.3 42.8 0.82 0.09   -0.66
Concentrate 211 68.3 4.73 0.11 0.01   -2.86
Fresh and Transitional material classified as Probable Reserves.

 
Commenting on the announcement, Gindalbie’s Managing Director, Mr Garret Dixon, said the upgrade represented an outstanding result, improving all aspects of the previously announced Resource, Reserve, Concentrate and pit designs and confirming that Karara would deliver a long-term source of premium quality concentrate and pellets for Gindalbie’s joint venture partner, AnSteel. 

“We have now achieved four successive resource upgrades for Karara within the space of three years, with the Indicated and Inferred Resource doubling again from the previous resource as at September 2007 to the current level of 1.85 billion tonnes,” Mr Dixon said.  

“In addition, we have now defined an Ore Reserve over and above these Indicated and Inferred Resources of greater than half a billion tonnes,” he said. “This demonstrates clearly that Karara will sustain a long-life operation at the expanded 12Mtpa production rate currently being examined, as well as potential future expansions above this production level. 

“The revised Mineral Resource and Ore Reserve inventory would support over a 100-year plus mine life at the 8Mtpa production rate currently contemplated and 75 plus years at the expanded 12Mtpa production rate,” Mr Dixon added.

“The more work we do on this deposit, the better it is found to be. There has been improvement even in parameters such as the waste to ore strip ratio which means a corresponding reduction in mining costs. It is also worth noting that, based on the conversion and concentrate production parameters achieved, the revised resource and reserve equates to over 900 million tonnes of high-grade magnetite concentrate grading over 68% Fe – making this deposit equivalent to or better than some of the biggest hematite deposits in terms of potential iron ore product production in the world,” he said.

– ENDS – 

Released by: On behalf of:
Nicholas Read

Read Corporate

Mr Garret Dixon/Mr Michael Weir

Managing Director/Investor Relations Manager

Telephone: (+61-8) 9388-1474 Telephone: (+61-8) 9480-8700
Mobile: (+61-8) 419 929 046 www.gindalbie.com.au

About Gindalbie Metals Ltd (ASX: GBG)

Gindalbie is well advanced towards achieving its vision of becoming a leading independent Australian iron ore company with a diversified portfolio of magnetite and hematite production assets, located in the Mid West region of Western Australia

The initial focus of Gindalbie’s growth strategy is the Karara Iron Ore Project, located 225km east of Geraldton, where it will deliver initial production of Direct Shipping Ore (DSO) hematite in 2009 to be followed by production of high grade magnetite concentrate and blast furnace quality pellets in 2010. Karara is being developed through a 50:50 Joint Venture with Ansteel, one of China‘s leading steel and iron ore producers.

Gindalbie’s longer term growth will be propelled by the exploration and development of its extensive 1,900 sq km tenement portfolio, which includes numerous prospective magnetite and hematite exploration targets expected to deliver a long-term pipeline of growth opportunities.

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