Iron ore miner Gindalbie Metals has projected a 20% cost blow out for its Karara iron ore project.
Despite a bankable feasibility study outlining capital costs for the mine at $1.648 billion, the cost of the project has ballooned to $1.975 billion.
The miner stated that a significant proportion of the increased cost went towards design scope and infrastructure costs for what will be a much larger project than initially designed.
Any shortfalls in capital would be met by the company and Chinese joint venture partner Ansteel.
“Gindalbie has identified a future working capital funding requirement of approximately $430 million made up of pre-commissioning items (insurance, building spares inventory, mining pre-strip) of $184 million and Finance Facilities (bonds, interest and working capital) of $246 million,” the company stated.
After improvements to infrastructure the mine will be capable of producing upwards of 30 million tonnes per annum.