New announcement/letter to SH just released to ASX, not picked up by HC.
Dear Shareholder, I am pleased to be writing to you for the first time as Chairman of your Company to update you on significant developments since our AGM in November, which many of you attended. The pace and depth of the activity undertaken by your Company over this short period has been a collaborative effort by your Board and our employees, with everyone contributing enormously. I would wish to pay special thanks for the role our Executive Director John Lester played as interim Managing Director a role he has now stood down from and at the same time welcome to the team our new Chief Executive Officer Mark Hine. Marks contribution has been outstanding over the short period he has been with GWR and we look forward to the continuation of his experience, talent and energy with the company over the coming years. Project Infrastructure We are very pleased about the recent announcement by Oakajee Port and Rail (OPR) of the increase in port and rail capacity from 35mtpa to 45mtpa and believe this will deliver the infrastructure needed to ensure the success of the iron ore industry in the Mid West. In view of our location, we also have the short-term infrastructure option, pending the completion of the Oakajee development, to enter discussions for the export of ore through the port of Esperance which already exports significant iron ore volumes from Cliffs, one of our major shareholders. We have based our planning around exporting 10 million tonnes per year of high-grade low-impurity (DSO) hematite ore, and of course infrastructure access for our Company is critical. Iron Resource Just prior to 2009s AGM, your Company was able to announce a significant resource upgrade expanding the iron ore resource by 28% to 141.1 million tonnes @ 59% Fe (Inferred 97.5 Mt @ 58.4% Fe, Indicated 42.4 Mt @ 59.7% Fe and Measured 1.2 Mt @ 61.9% Fe). In February this year, an additional 6.6 million tonnes of iron mineralisation was identified to bring the resource to 147.7 million tonnes @ 59% Fe (Inferred 97.3 Mt @ 58.4% Fe, Indicated 49.2 Mt @ 60.5% Fe and Measured 1.2 Mt @ 61.9% Fe). These continuing resource upgrades have given your Board confidence to continue with its plans to have all necessary approvals in place by the end of 2010. This is to enable the commencement of mining at the high-grade low impurity Joyners Find deposit, subject to suitable commercial arrangements being negotiated with prospective customers for either mine gate sales or the Company trucking ore to the nearest rail head at Leonora. The Board has chosen to rename Joyners Find the John William Doutch deposit In recognition of the significant contribution in establishing GWR made by the late Mr John William Doutch, who passed away in 1998. Your Company believes production of high-grade low-impurity DSO hematite ore from the John William Doutch deposit will be keenly sought in the market place and a program of metallurgical testwork, resource modelling and mine design (including pit optimisation studies) has commenced. Iron Ore Pricing The call by the China Iron and Steel Association for a two month boycott of iron ore purchases from the worlds three main exporters has introduced a wild card into demand forecasts for iron ore for the remainder of 2010 and possibly beyond. What it does demonstrate is the importance of having end users of iron ore involved with the production process and here, GWR is indeed fortunate. Hunan Valin Steel continues its high levels of support for your Company and is looking forward to our aggressive exploration and development program at the Wiluna West Iron Ore Project. Hunan Valin Steel is now one of the top 20 global steel producers, increasing their steel output in the midst of the global financial turmoil by 4.4% last year to 11.8Mtpa, a remarkable effort. Gold We are also very pleased to have recently provided a 25% increase in an identifiable gold resource at the Wiluna West project, up to 1,119,000 tonnes @ 3.07 grams per tonne Au (Inferred 568,000 tonnes @ 2.39g/t Au, Indicated 492,000 @ 3.56g/t Au and Measured 21,000 @ 7.6 g/t Au). This has come from a desk top review and reinterpretation of earlier drilling data and geology models used at our Wiluna leases and is separate from our iron mineralisation. A key aspect was remodelling the Iron Monarch, NWBIF and Iron Duke deposits using modern block modeling techniques. The review indicated the three deposits are likely to form a larger single deposit which has been renamed the Golden Monarch. A mining approvals process for the Golden Monarch is underway with the aim of first production by the end of 2010. The deposit is situated within granted Mining Leases and detailed flora and fauna surveys have already been undertaken as part of the Wiluna West DSO Hematite Iron Ore project, as have extensive aboriginal heritage investigations. Discussions with nearby potential milling facilities are progressing well. The Company is also reviewing a number of other gold assets in Western Australia with a view to the possible acquisition of complementary gold assets by the Companys subsidiary, Aureus Gold Limited, as part of the proposed spin-off by the Company of its gold assets. Capital Raising In November, the Company announced its intention to make a placement of up to 15% of its issued share capital to investors entitled to receive excluded offers under the Corporations Act. The Company also plans to offer all existing shareholders the opportunity to subscribe for shares in Golden West Resources Limited under similar terms to the placement via a share purchase plan. GWR has had several approaches to participate in this placement and we are working through each of these to ensure the best fit and most favourable outcome for the Company. The Company remains well funded in the short term and as such we are comfortable in not rushing this process to ensure a good mix of investors, including existing shareholders, strategic industry participants and sophisticated or institutional investors. I look forward to writing to you in more detail at the time of launching the share purchase plan. Yours faithfully David Sanders Chairman
GWR Price at posting:
68.1¢ Sentiment: LT Buy Disclosure: Not Held
