Flinders Mines will progress to a definitive feasibility study (DFS) for its cornerstone Pilbara Iron Ore Project in Western Australia. The DFS, to be undertaken by WorleyParsons, is scheduled for completion in quarter two of 2012 which maintains the current project timeline of first production from the Pilbara operation during 2014.

The focus of the DFS will be a proposed annual production rate of 15 million tonnes from start-up, which is the higher of two options found to be economic by a pre-feasibility study (PFS) completed in January this year by WorleyParsons. Value improvement studies which began after the PFS identified significant project value would be added by starting the project at the higher production rate.

Flinders Mines’ chairman Bob Kennedy says the proposed long life mine, the company’s analysis of its economics, and global market demand and supply conditions for iron ore, have underpinned the decision to commence a DFS based on an immediate start-up at 15 million tonnes. This demonstrates a high degree of confidence in Flinders Mines being able to realize an infrastructure solution and deliver long term value to shareholders.

“The PFS endorsed an initial stage 1 mine of 5 million tonnes at a capital cost of Aus$488 million or the option to move immediately to a stage 2 start-up mining operation delivering 15 million tonnes at an additional cost of Aus$640 million.

“We have opted for the latter as the Board of Flinders Mines and the strong management team driving this project are extremely confident of the potential to sustain production of high quality ore over a long mine life. Such a commitment would not be made if we did not have a high level of confidence in being able to realize the project's value.”

Bob Kennedy adds “The decision also further defines the project framework around which we are continuing ongoing negotiations with providers of infrastructure solutions and offtake agreements for the Pilbara Iron Ore Project.”

Flinders Mines’ managing director Gary Sutherland says that subject to ongoing project milestones being met, the company is on track to commence detailed design work during the third quarter of 2012 with first production anticipated in 2014.

The focus for production is the Pilbara project’s Blacksmith tenement, one of two of the company’s close-proximity tenements in WA’s West Pilbara province.

Blacksmith contains the cornerstone Delta deposit targeted for first mining. The tenement is between Rio Tinto’s Caliwingina North iron ore resource, Fortescue Metals’ Solomon iron ore hub, API’s West Pilbara Iron Ore Project to the west, and to the south, Rio’s Brockman 2 & 4 iron operations.

The Pilbara Iron Ore Project, 175km south of Dampier, contains a current global indicated and inferred resource of 748 million tonnes at an average grade of 55.4% iron.

www.flindersmines.com

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