Ann: Another major increase to McPhee Creek JORC , page-3

re: Ann: Another major increase to McPhee Cre... Another resource upgrade for Giralia
Tania Winter
Friday, 3 December 2010

PILBARA iron ore explorer Giralia Resources is continuing its run of resource upgrades, this time reporting a 50 million tonne jump in numbers at its McPhee Creek property to 260Mt grading 56.2% iron.

The new estimate incorporates drilling from the main range deposit, but further upgrades are tipped once activities accelerate at McPhee West which has already returned a result of 100 metres at 56.7% iron and 0.03% phosphorous.

The company has been quick to grow numbers at McPhee Creek which started out in December last year with a maiden resource of 52.1Mt. This was increased to 161.4Mt in July and to 210Mt some two months later.

Combined direct shipping ore resources at Giralias McPhee Creek and nearby Daltons-Mount Webber deposits now total more than 300Mt.

An independent scoping study at McPhee Creek has already confirmed it to be a viable proposition based on a start-up base case 2Mtpa operation, starting in September 2012.

The study delivered a net present value of $345 million and an internal rate of return of 47.4% (ungeared) utilising owner-operated mining and public road haulage to Port Hedland.

The capital cost, including the cost of a trucking fleet, came in at $129 million, but was reduced to $75.9 million utilising contract road haulage.

Superior returns were made from models utilising road and rail combinations, including via the declared third-party Goldsworthy line, located 100 kilometres away.

An alternative 10Mtpa rate was also scoped utilising a new 160km rail spur to a third-party rail and returned the best financial model with an NPV of $1.6 billion.