Targets achieved, BC Iron aims higher
26th Jul 2012
JULY 26 – After achieving the four guidance targets he set for 2011-12, BC Iron’s Mike Young is aiming higher.
Australian iron ore junior BC Iron is building “sprint” capacity into its 50-50 Nullagine iron ore joint venture with Fortescue Metals Group 140km north of Newman in the East Pilbara region of Western Australia.
Coming after the company reached a sustained rate of 5Mtpa iron ore produced and exported in May, over a month ahead of the June 30 target, attention has turned to creating the excess capacity of about 1Mtpa in each of the mining, crushing and haulage systems.
The JV has received environmental approval for a further upgrade to the crushing plant to be carried out in July, resulting in a nameplate capacity increase to about 5.8Mtpa.
In the haulage area, contractor Toll Mining Services has three additional triple road train units on stand-by to boost its fleet of eight 360t payload PowerTrans pit haulers used to truck ore from the mine by a 58km sealed road to be loaded on rail at Fortescue Metals’ Christmas Creek facilities. Each pit hauler transports over 700,000tpa.
From its 5Mtpa platform, BC Iron says its strategy for the next phase of growth focuses on growing the existing resource base to extend the mine life at the Nullagine JV by 3-5 years, exploring other opportunities in the Pilbara leveraging off its strong relationships with key stakeholders and developing strategic relationships in other iron ore jurisdictions.
Record June 2012 quarter (Q4) figures of 1.48Mt mined and 1.43Mt shipped boosted the company’s full year exports to 3.55Mt. The company received an average sales price of around $US122/dmt, against average freight-on-board cash costs of around $42/t.
The $122/dmt rate cost and freight price received by BC Iron for its Bonnie Fines product compares with the Platts average CFR rate (62% Fe fines delivered into China) of $141/dmt for the June quarter. The company says the difference reflects price adjustments for iron units and application of an agreed discount with primary offtake partner Henghou Industries (Hong Kong) for shipments.
Q4 cash operating costs trended strongly downwards due to higher production and particularly the delivery of the eight larger pit haulers replacing smaller payload triples but are expected to rise in the September quarter to the lower end of BC Iron’s life of mine forecast of $45-50/t, with variations reflecting the mining location and waste-ore ratio. The cash operating costs exclude royalties, marketing and head office costs.
An increase in the ore reserve from 34.7Mt to 42.4Mt grading 57% Fe (64.8% CaFe), including a Bonnie East ore reserve of 7.7Mt at 57.2% Fe (65% CaFe) has extended the life of the Nullagine JV to 9 years.
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