Gindalbie Metals anticipates beginning hematite production at its Karara Project in Western Australia in the second half of 2010 and production from the flagship magnetite phase in the first half of 2011.

The timelines have been extended following delays with approval of a joint venture with AnSteel as well as delays with environmental approvals, which have subsequently delayed getting on site to start construction.

While waiting for the approvals Gindalbie’s CEO Garret Dixon says the company has been working hard on procurement of major long lead items and that process has been completed with most orders placed.

“We’ve also been progressing with the front end engineering design of the concentrator. Some parts of that project have been completed and some parts will shortly be heading into detailed design phase.

“We’ve also been using the time to further negotiations on the infrastructure required including the transmission lines, rail developments and finalization of our agreements at Geraldton Port. ”

The company recently held discussions with AnSteel president Dr Zhang Xiaogang, who visited Perth to meet with the State Government regarding delays in environmental approvals, to explain the strength of the Chinese economy and to re-affirm AnSteel’s commitment and support for development of Karara.

AnSteel is a 12% shareholder in Gindalbie and a partner in the Karara project.

Garret Dixon says, “Karara is very fortunate to have such a strong partner. The benefit of having Ansteel as partner is enormous given they bring an offtake agreement, equity funding, project funding plus 75 years experience in mining and processing magnetite.

“There’s been a lot of political debate about Chinese investment and I think there’s been a bit of fear of Australian resources being ‘owned’ by the Chinese. I think that fear is unwarranted. The reality is Chinese investment in Australia is still very small. Official government figures show total Chinese investment of about $6.2 billion, compared to $445 billion for the US and $410 billion for the UK . Unofficial data suggests Chinese investment has risen to around $30-$40 billion but even that is only about 1% of total foreign investment.

“This project and this investment ticks all the boxes on the benefits to Australia under the government’s investment guidelines. AnSteel’s investment will see a new project developed – one that will create more than 1500 new construction jobs, 500 long term jobs, generate new taxes and royalties and support new common user infrastructure.”

While believing there will be some contraction in iron ore prices this year, Garret Dixon says it won’t affect the overall project economics. “This is because we have modelled and done all feasibility work on long-term average iron ore prices, which are well below current contract prices, and the project is very robust over its 30 to 40-year mine life.”

www.gindalbie.com.au