Mount Gibson Iron will spend $97 million to redevelop and restart production at the Koolan Island iron ore mine in Western Australia after a feasibility study delivered “compelling economics” for the project.
Operations at Koolan Island in the state’s Kimberley region were suspended in November 2014 following a seawall failure which led to the hematite mine’s main pit being flooded.
High tides around the pit breached a damaged section of the wall, which was already under repair, to cause the flooding. The incident left 200 workers at the mine redundant as Mount Gibson investigated a solution to resume operations.
The company announced yesterday that extensive technical evaluation over the past two years, including detailed design and reviews by independent engineering experts, confirmed a safe and viable design and construction method to rebuild the seawall ahead of a restart of production.
Construction of the seawall, pit dewatering and other activities associated with restarting production are expected to take 24 months, according to Mount Gibson, which is targeting first ore sales in early 2019.
The project is anticipated to involve 80 workers during construction, with about 315 employees and contractors to be required during production.
Mount Gibson chief executive officer Jim Beyer said the company had identified a safe and effective design and construction method for rebuilding the main pit seawall after two years of work.
“Coming shortly after extending the life of our Mid West operations, the redevelopment of Koolan Island also re-establishes Mount Gibson’s status as one of Australia’s premier high-grade producers at a time of rapidly growing demand for premium quality iron ore products,” Beyer said.
“Importantly, it also provides a long-term platform for further value creation. Our substantial cash reserves and cashflow from existing operations give us the capacity to undertake this investment without any need to take on debt for the project and still pursue other attractive opportunities which may arise in the months and years ahead.”
In a feasibility study, Mount Gibson outlined a 3.5-year mine life for the Koolan Island operation, with all-in cash costs of $53 a wet metric tonne.
The company will use the existing Koolan Island mining fleet, crusher, shiploader, accommodation camp, stores, workshops and administration facilities at the site.