Ann: High Grade Koolan Island Ore Reserves Increase, page-23

https://thewest.com.au/business/min...-for-100m-koolan-island-rebuild-ng-b88812715z

Mt Gibson rewarded for $100m Koolan Island rebuild

Stuart McKinnon  |  The West Australian
Saturday, 21 April 2018 11:27AM
Stuart McKinnon

Mt Gibson Iron had to rebuild the seawall at its Koolan Island project in the Kimberley after the main pit was flooded.
Mt Gibson Iron’s decision to spend $100 million rebuilding its Koolan Island project in the Kimberley looks set to pay off in spades when the mine re-opens early next year.
The Chinese-controlled company yesterday upgraded its high-grade resource at Koolan 64 per cent to 21Mt at 65.5 per cent iron, extending its mine life from 3.5 years to five years and improving its economics.
Mt Gibson decided to rebuild the project last year after the seawall separating the mine from the ocean collapsed in 2014, flooding its main pit.


Based on the prevailing exchange rate and premiums for ore with a 65 per cent iron content, the mine could be operating at margins of more than $50/t.
The company has consequently lifted the pre-tax net present value of the project to $536 million for a 63 per cent internal rate of return.

The restart will require more than 300 workers.
Chief executive Jim Beyer said the resource upgrade dramatically increased Koolan’s value to shareholders on even the most conservative pricing and exchange rate assumptions.
“This is a unique high-grade project in the iron ore space and few other project opportunities in any other commodity can offer comparable value to a company of our size,” he said.
“Importantly, it also provides a strong platform for further value creation.”
The project was 57 per cent complete at the end of March with the first ore expected in the first quarter of calendar 2018.

The project was 57 per cent complete at the end of March.
Mt Gibson expects to start recruiting the 330 workers it needs to operate Koolan in the September quarter. It expects to wind up its Mid-West operations at the end of this year.
Last week, Mr Beyer said he expected the wide spread of iron ore prices across varying grades to continue, with some “pinching and swelling” based on seasonal demand and regionally specific policy changes in China.
Mt Gibson shares closed up 2¢, or 4.8 per cent, to 43¢ as the iron ore price rallied another 3.9 per cent to $US68.45/t yesterday.