Iron ore majors ramp up supply even as China faces challenges
Iron ore is one of the year’s worst performing major commodities, slumping by almost a quarter as China’s property crisis drags on.
Gindalbie Metals Limited (ASX: GBG – “Gindalbie”) is pleased to announce the Karara Iron Ore Project will reach a key milestone in coming months with the value of service contracts and orders expected to reach a total of $1 billion.
Orders in recent months for items such as a dual wagon tipper, water pipeline, magnetic separators, rail and pressure filters have lifted the total commitments for Karara to approximately $700 million as activity on site at Karara, 225km east of Geraldton, continues to gather pace.
The award of a further $300 million of major new construction, equipment and services contracts in coming months will see the project hit the $1 billion milestone and cement Karara’s position as the most advanced major project development in the Mid West region of Western Australia.
Some of the major new service and construction contracts expected to be awarded include a facilities management contract to manage the Karara and Lochada accommodation villages, the construction of the 85-km Karara rail spur connecting the project with the existing rail line near Morawa, the installation of the 140-km water pipeline from Mingenew to site, civil work at Geraldton Port and the construction of access roads.
The new contracts are in addition to the major contracts already awarded by the Karara Joint Venture which include:
· Karara camp and accommodation village Doric Constructions $70 million
· Earthworks and concrete construction NRW Holdings $120 million
· Management and construction services WorleyParsons and AMEC Minproc $140 million
“The award of these substantial new contracts demonstrates our confidence in the Project and our commitment to progress full steam ahead at Karara, even as we finalise the debt funding arrangements and recently announced equity raising,” said Gindalbie’s Managing Director, Garret Dixon.
“The award of these contracts brings to the forefront the flow-on benefits to the broader economy which major mining projects such as Karara generate for Australian workers and businesses right across the country,” he added.
Gindalbie and its partner Ansteel are currently finalising the security arrangements and final documentation for the US$1.2 billion Karara Project Loan facility and the recently announced $175 million equity raising to underpin project construction and working capital, both of which are subject to shareholder approval at meetings which have been convened respectively for 16 June and 28 June.
Construction Update
Construction activities at the Karara Project are proceeding on schedule.
NRW Holdings has mobilised to site and started work on the major earthworks and concrete package, which encompasses site earthworks and concrete foundations, as well as construction of site drains, site roads, a retention pond and the all-weather airstrip.
Construction of the airstrip, which will be capable of accommodating up to 50-seat aircraft, is scheduled for completion in August, allowing daily flights directly to site.
EDI Downer has commenced work on the tower footings for the 330kV power transmission line from Karara to Eneabba, which will provide direct connection of the Project to the South West power grid.
The 300-person Lochada Village, located between Karara and Morawa, is now fully operational. Construction of the main 1650-person Karara Village is progressing, with the first 300 rooms expected to be available for occupancy from later this month.
All the long lead items, including primary crusher, secondary crusher, tower mills, high pressure grinding rolls and ball mills have either been completed or are progressing on schedule.
