Gindalbie Metals has finalized a second long-term off-take contract with joint venture partner Ansteel covering the life-of-mine production from the Karara Iron Ore Project in Western Australia.
The contract, between joint venture company Karara Mining Limited (KML) and Angang Group International Trade Corporation, covers the total hematite production from Karara, which is scheduled to start in mid-2011. It allows for annual sale of hematite volumes up to 3 million tonnes.
The pricing structure for hematite will be based on the Hamersley Iron Pilbara lump and fines (FOB) benchmark price.
Gindalbie’s managing director Garret Dixon says, “We are very pleased to conclude all the off-take agreements from the Karara Project. The hematite in particular provides KML early cashflow while we commission the magnetite operations.
“This agreement further demonstrates the significant progress we are making at Karara and the value of having a quality partner in Ansteel.”
The signing of the hematite off-take contract follows the execution of a landmark life-of-mine agreement covering the total magnetite concentrate production from the Karara operations, valued at more than $US65 billion.
The first shipment under the new magnetite off-take agreement is expected to occur in the second half of 2011 with commissioning of the Karara Project.
The initial focus of Gindalbie’s growth strategy is Karara, 225km east of Geraldton, where it will deliver initial production of direct shipping ore hematite in mid-2011 to be followed by production of high grade magnetite concentrate and blast furnace quality pellets in the second half of 2011. Karara is being developed through a 50:50 Joint Venture with Ansteel, one of China’s leading steel and iron ore producers.
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