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.

August 4th (Mineweb) – The North West Iron Ore Alliance has further outlined its case for the establishment of third party infrastructure access in the Pilbara, today announcing it has submitted responses to the recent draft recommendations from both the Pilbara Rail Access Interdepartmental Committee (PRAIC) and the National Competition Council (NCC).

The Alliance announced today (Monday) that it intended to play an active role in shaping the framework for a third party access regime by participating in the PRAIC and NCC consultation processes, and remained strongly committed to working towards a constructive solution with other stakeholders in the Pilbara. 

Independent Chair of the North West Alliance, Ms Megan Anwyl, said access to existing infrastructure remained a fundamental necessity to the formation of a sustainable, viable and successful junior iron ore industry in the Pilbara.

“We believe that BHP Billiton and Rio Tinto have a legal obligation to allow rail haulage to third parties under their various State Agreements, and that this would lead to a healthy diversification of the iron ore industry in the Pilbara and better social and economic outcomes for its residents and the nation as a whole,” she said. 

“If fair and equitable infrastructure access is not granted, some mine sites would not be financially viable, or production could be severely limited due to the environmental, social, financial and potential licensing restrictions relative to the trucking of iron ore,” Ms Anwyl continued.  “Further, the State Government has a clear policy preference towards rail over road transport.”

“The four members of the North West Iron Ore Alliance – Atlas Iron, BC Iron, Brockman Resources and Ferraus – therefore have an obligation to their shareholders to negotiate a workable solution for the transportation and shipment of their ore through the Pilbara,” she commented.  “We have been very encouraged by the draft PRAIC regime and NCC recommendation, and look forward to providing further input towards the final outcomes through the responses we have submitted.” 

Ms Anwyl said one of the key PRAIC recommendations the Alliance had made was to support the need for the appointment of a strong Regulator to ensure a timely, effective and equitable access regime.

“It is important that the interests of all parties are balanced, and that there is an independent body to ensure that this balance is maintained,” she said.  “The North West Iron Ore Alliance therefore supports the need for a strong Regulator who would be responsible not only for approving such factors as the pricing and costing of the rail haulage regime, as but also for key issues such as capacity and service level principles, safety principles and capacity modelling principles.” 

The North West Iron Ore Alliance was formed in 2007 to support the development of a junior iron ore sector in the Pilbara. The member companies – Atlas Iron, BC Iron, Brockman Resources and FerrAus – have agreed to cooperate on issues such as infrastructure development and access, statutory approvals and community development. 

Collectively the members of the North West Iron Ore Alliance have the potential to deliver over 50 million tonnes of iron ore per annum by 2014, generating approximately $165 million in State royalties per annum.

August 4th (Reuters) – Metalloinvest, the Russian miner founded by billionaire Alisher Usmanov, forecasts core earnings will double this year to $5.2 billion and revenues will rise 80 percent to over $11 billion, a company source said on Monday.

Metalloinvest, which is planning an initial public offering of its shares this year, plans to invest 266.8 billion roubles ($11.4 billion) between 2009 and 2012, in addition to investment of at least 28 billion roubles ($1.2 billion) planned for 2008.

 

“The market dynamics will allow us to reach these numbers this year,” the source, who declined to be identified, told reporters, referring to the forecast revenue and earnings before interest, taxation, depreciation and amortisation (EBITDA).

 

Metalloinvest, co-owned by Usmanov and billionaires Vasily Anisimov and Andrei Skoch, produces 40 percent of Russia’s iron ore. It operates the country’s two largest iron mines and holds the world’s largest reserves of the steelmaking raw material.

 

Global iron ore prices have quadrupled in the past five years as China, producer of a third of the world’s steel, devours more of the raw material. Benchmark prices set by leading miners and Chinese buyers rose as much as 96.5 percent this year, the highest jump in a decade.

 

Metalloinvest posted 2007 revenues of $6.1 billion and EBITDA of $2.5 billion, the source said, confirming figures issued by the company earlier this year.

 

Metalloinvest plans to float up to 25 percent of its shares in an autumn IPO, sources close to the deal have said previously. The company has also been linked with London-listed Kazakh copper miner Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz).

Usmanov also agreed in May with Vladimir Potanin, the largest shareholder in Norilsk Nickel (GMKN.MM: Quote, Profile, Research, Stock Buzz), to swap assets in a deal that could create a large, diversified Russian mining house.

 

The terms of that deal envisage Usmanov buying up to 10 percent in Norilsk and Potanin purchasing 25 percent plus one share in Metalloinvest. [ID:nL28692466]

 

 

 

HIGHER OUTPUT

 

Metalloinvest plans to increase iron ore concentrate output by 50 percent to 60 million tonnes by 2013.

 

This year, the company plans to increase production of iron ore to 102 million tonnes from 100.16 million tonnes in 2007. Iron ore concentrate output is forecast to rise to 42.8 million tonnes from 41.3 million tonnes, the source said.

 

Output of hot-briquetted iron is forecast to double to 2.46 million tonnes from 1.21 million tonnes after the launch of a second plant at the company’s biggest iron mine, Lebedinsky.

 

Production at Metalloinvest’s two steel mills ranks it Russia’s fifth-largest steel producer.

 

Crude steel output is forecast to rise to 6.91 million tonnes in 2008 from 6.44 million tonnes last year and rolled product output to 5.18 million tonnes from 4.85 million tonnes.

August 4th (The Age) – POLITICAL intrigue and rising resources nationalism has raised fresh doubts over Rio Tinto’s grip on its $US6 billion ($A6.46 billion) Simandou iron ore project in Guinea.

Rio has portrayed the proposed development of the huge iron ore deposit as a Pilbara in the making.

And because of its importance as a growth project, it is a key plank in Rio’s defence against BHP Billiton’s $170 billion takeover bid.

But a rattled Rio has revealed that it has received correspondence from Guinean President Lansana Conte purporting to rescind the Simandou mining concession.

Along with its partner in the project, the World Bank’s International Finance Corporation, Rio is studying the issues raised in the correspondence.

Rio said it was “confident that its arrangements are in all respects in conformity with Guinean laws and that it has complied with its obligations”.

It said it had negotiated and executed the mining concession in “full transparency with the Guinean Government”.

Rio’s potential loss of Simandou came as President Conte sacked Secretary-General Mamady Sam Soumah. State TV said Mr Soumah would be replaced by Alpha Ibrahima Keira, the president’s son-in-law.

It was Mr Soumah who first raised tenure concerns for Rio over Simandou in May when he said the Government would be reconsidering the concession because of irregularities in the original agreement. Just as ominous, Guinea’s latest threat to Rio’s Simandou ownership follows the return to Beijing of a Chinese trade delegation offering billions of dollars of investment in Guinea in return for Chinese ownership of resource projects.

There is long-running unease among foreign resource companies in Guinea because of a special committee set up to renegotiate all mining agreements, ostensibly to capture a bigger share of the boom in commodity prices.

Even so, Guinea’s Mines Minister, Ahmed Kante, said early last week that Rio’s Simandou iron ore mine was on track and would benefit Guinea and the company.

The question over Simandou ownership could not come at a worse time for Rio. In May, Rio called on the market to start ascribing some value for the project in valuations of the company — an effort to close the widening gap between the imputed value of BHP’s 3.4-for-1 conditional scrip bid and Rio’s share price.

But shortly after Rio’s call to the market, the first query on Simandou’s mining concession from the Guinean Government surfaced. Somewhat ironically, it was BHP managing director Marius Kloppers who some time later warned about getting too excited too early about projects subject to high levels of sovereign risk. He used BHP’s bauxite-alumina project plans in Guinea as an example.

Rio has spent or committed to spend $US300 million on Simandou.

August 4th (Reuters) – Brazilian iron ore miner Vale (VALE5.SA: Quote, Profile, Research)(RIO.N: Quote, Profile, Research) has ordered a dozen of the largest class of ore carriers from a Chinese shipbuilder for $1.6 billion, aiming to boost business with fast-growing Asian customers.

Vale, the world’s largest iron ore miner, expects the huge vessels to reduce shipping costs and make its ore more competitive with nearer Australian and Indian ore for the fast-growing Chinese steel industry, already the world’s largest.

 

“Looking at the expansion projects we have and (what) other players are doing, we don’t see the level (of ore demand) will be down for the next 2-3 years,” Eduardo Bartolomeo, Vale’s executive director for logistics, told reporters.

 

Vale said it ordered 12 very large ore carriers from Jiangsu Rongsheng Heavy Industries Co Ltd, each with a capacity of 400,000 deadweight tonnes. Delivery of the first is expected in early 2011 and the order is due to be completed by 2012.

 

The carrier programme adds to Vale’s previously announced global investment programme of $59 billion for 2008-12, as it aims to boost iron ore output by 50 percent to 450 million tonnes by 2013.

 

Vale has said it planned to ship more than 100 million tonnes of iron ore to China in 2008 under term contracts, a rise of 10 percent from 2007.

 

China’s crude steel output this year is forecast to rise about 10 percent to 550 million tonnes.

“So what we are doing is to find that option that gets iron ore closer. What we are doing is to stimulate steelmakers to build larger ships,” Bartolomeo told a media briefing, adding that Vale would outsource the operation of the fleet.

 

Asian steel mills’ negotiations with ore miners on annual term iron ore prices in 2008 stalled over the proposed inclusion of a freight premium sought by the Australian miners to reflect the higher shipping costs to China for Brazilian ore.

 

Bartolomeo said the large vessels would help Vale, which shed its sea transport operations in 2001, to address logistics shortcomings and better compete with global rivals such as BHP Billiton (BHP.AX: Quote, Profile, Research)(BLT.L: Quote, Profile, Research) and Rio Tinto (RIO.AX: Quote, Profile, Research)(RIO.L: Quote, Profile, Research).

 

The Australian companies received higher price increases than Vale in annual iron ore supply contracts with Asian steel mills for 2008.

 

“We’re trying to correct it — not the premium, but the freight rates,” Bartolomeo said. “I’m not happy with the freight levels. I don’t think they represent the actual cost of transportation.”

 

The Baltic Exchange chief sea freight index .BADI for global raw materials trade soared to a record 11,793 points in May, although it has since eased to 8,280 on Friday.

 

Vale, formerly Companhia Vale do Rio Doce (CVRD), said the new vessels would be part of a Brazil-Asia shuttle service with 18 very large ore carriers able to haul a combined total of 7.1 million deadweight tonnes.

 

The fleet will be able to carry an estimated 30.2 million tonnes of iron ore per year from Brazil to Asia, equivalent to 31 percent of the company’s shipments to China in 2007, Vale said.

August 1st (ABC News) – A fully loaded iron ore carrier has run aground at Port Hedland. The Iron King carrier is understood to be leased by the Fortescue Metals Group and was carrying 160,000 tonnes of iron ore when the incident happened last night.

The Executive Director of Operations at Fortescue Metals, Graeme Rowley says the carrier had been loaded and was leaving the Port when it appeared to lose steering. “It has gone and hit the edge of the channel and is stuck waiting for the next high tide,” Mr Rowley said.

The carrier was travelling about seven knots at the time and was on its way to China. Mr Rowley says no-one was injured and at this stage there are no reports of any hydrocarbon leaks. He says divers are on their way and will inspect the ship for damage after it has been refloated. The Port Authority will attempt to refloat the carrier at the next high tide. The stricken vessel is blocking two other carriers which were trying to enter the harbour to load.

August 1st (Reuters) – Russian steel maker Evraz Group (HK1q.L: Quote, Profile, Research) has joined forces with China Metallurgical Group Corp (MCC) to gain access to Australia’s vast iron ore reserves and supply Chinese steel mills hungry for the key raw material.

Evraz, part-owned by billionaire Roman Abramovich, said on Thursday it would own 75 percent of a joint venture to develop the Cape Lambert Iron Ore project in Western Australia. MCC will own a quarter of the project, which will ship its ore to China.

 

“Given Chinese demand for the raw materials used in steel production is expected to remain very strong, having something in Australia seems like the right move,” said Vladimir Zhukov, senior mining analyst for Lehman Brothers in Moscow.

 

Global prices for iron ore, a crucial ingredient in steel, have quadrupled in the last five years as China — producer of a third of the world’s steel — devours ever more raw materials.

 

Benchmark prices set by leading miners BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research) and Rio Tinto (RIO.AX: Quote, Profile, Research) (RIO.L: Quote, Profile, Research) with Chinese buyers rose as much as 96.5 percent this year, the highest jump in a decade.

 

Evraz said in a statement MCC would be entitled to sign an offtake agreement for up to 60 percent of the iron ore produced.

 

Evraz said the Cape Lambert project would be able to produce 15 million tonnes a year of magnetite concentrate. It said the project was in the feasibility stage, but gave no time frame for the start of production or the cost of developing the project.

A potential drawback to the Cape Lambert project is its reliance on magnetite-type ore, which has been largely untested as a reliable source of feed for steelmaking.

 

Traditionally, the Australian iron ore industry has been based on mining higher-grade hematite ores, which currently account for 96 percent of Australia’s total iron ore production.

 

 

 

LONG-TERM INVESTMENT

 

Cape Lambert contains 1.56 billion tonnes of magnetite iron ore resources to internationally recognised Joint Ore Reserves Committee (JORC) standards, Evraz said.

 

“Evraz and MCC’s long-term commitment to the joint development of the project will further unlock the significant value of Western Australia’s mining industry,” Evraz Chairman and Chief Executive Alexander Frolov said through a spokesman.

 

He said the investment represented “an important milestone in the development of magnetite iron ore deposits in Australia”.

 

Cape Lambert Iron Ore Ltd (CFE.AX: Quote, Profile, Research) (CLIO.L: Quote, Profile, Research) this week completed the A$400 million ($378.8 million) sale to MCC of its namesake iron ore deposit, in a region where BHP Billiton and Rio Tinto both have major mining and shipping operations.

 

“Four hundred million dollars is a drop in the ocean for MCC,” said James Wilson, mining analyst for DJ Carmichael & Co in Perth, Australia. “It’s a long-term investment. They have 30 to 50 years of feedstock.”

Cape Lambert paid A$20 million in cash and stock options for the 408 sq km deposit in 2005. Its shareholders approved the sale on Monday following clearance from Australian foreign investment regulators, who have become wary of increased interest by foreign parties in Australia’s resources sector.

 

The Evraz deal is still subject to regulatory approval.

 

Evraz has already agreed to pay $1.5 billion for a controlling stake in another steel group, Delong Holdings (DELO.SI: Quote, Profile, Research), which holds an option to take about 12 percent of Cape Lambert. This had sparked speculation of a pending takeover bid until the sale to MCC was approved.

 

“Evraz already has a foothold in China. There could be synergies with Delong,” Lehman Brothers’ Zhukov said.

 

MCC, which controls assets worth $22 billion worldwide, is also involved in partnerships to develop nickel mines in Australia and Papua New Guinea. In the Pilbara region, it owns 20 percent of the Sino Iron Project near Cape Lambert.