Fortescue Metals Group and Iron Ore Holdings (IOH) have signed an agreement that will see Fortescue expand its Nyidinghu project into IOH’s tenements.
According to IOH the memorandum between the two miners gives Fortescue an option until 31 March 2013 to obtain a licence to mine the Iron Valley, which is continguous to FMG’s Nyidinghu deposit, which extends into the valley.
Fortescue CEO Nev Power said with more than two billion tonnes of iron ore resource already identified at Nyidinghu, the project is large scale and core part of the miner’s plan to expand production beyond 155 million tonnes per annum.
Fortescue Metals Group has increased its total iron ore resource to11.42 billion tonnes after delineating two billion tonnes at its new Nyidinghu project.
The project, which is only 35 kilometres from Fortescue’s existing Cloudbreak operations, increased its inferred resources from 1.03 billion tonnes to 2.01 billion tonnes at a cut off grade of 52% Fe.
It is contained within an area of about 14 square kilometres, and has an expected strip ratio of less than 2:1.
"Iron Valley’s location as a contiguous ore body to Nyidinghu would provide Fortescue with infrastructure layout and mining operations flexibility," Power said.
Fortescue has already made a non-refundable $25 million cash payment to IOH to obtain the option, which if exercised will see FMG develop the Iron Valley tenements and pay all costs associated with developing and operating the mine.
Iron Valley has a JORC resource of 260 million tonnes, 80% of which is already in the indicated category.