Merger improves prospects for massive mine
Thursday, 13th April, 2017
By Michael Murphy
A massive iron ore project that could provide a huge boost to the local economy took a step closer to reality yesterday with the announcement of a fast track plan.
Magnetite Mines has revealed it intends to merge with Lodestone Equities, a company which owns the rights to a large stretch of high grade iron ore near Olary, 150 kilometres west of Broken Hill.
Magnetite Mines Chairman Gordon Toll, who had a leading hand in the rise of the Fortescue Metals Group, briefed the Silver City last year about the company’s proposed Razorback project with a home base in Burra and mine site near Yunta, South Australia.
But yesterday’s merger announcement with Lodestone Equities, which is privately owned by Mr Toll, means the company will now initially concentrate on extracting the higher grade ore owned by that company near Olary.
The executive adviser for Magnetite Mines, Robert Williamson, who grew up in Broken Hill, was thrilled to be in the city yesterday when the announcement was posted on the ASX.
“It’s great news for Broken Hill,” said Mr Williamson, who was meeting with local transport operators yesterday.
“It’s closer to Broken Hill, it means that we can draw operators, maintainers and other service providers from Broken Hill,” he said.
Mr Williamson said he was travelling to South Australia today to begin talks with rail operators.
The finer details are yet to be nailed down, but it is estimated more than 100 people would be needed to construct the Olary mine.
The proposed mine site is 30 kilometres from the township, which would also reap huge benefits from the project.
The higher grade ore at Olary is more attractive to steel mills in China because they can mix it with the declining lower grade ore they currently source from the Pilbara in Western Australia.
The higher quality ore would also open doors for Magnetite Mines to sell to the Middle East.
The company would continue to develop its larger mine near Yunta, which had an initial price tag of $4 billion to construct, with a proposed output of 25 million tonnes per annum.
The financial barrier would be significantly reduced for the Olary Project, which has a proposed output of 5 to 10 million tonnes per annum.
Magnetite Mines has already procured non-binding agreements to sell eight million tonnes per year, and is currently exploring “traditional and non-traditional” options of financing the operation.
Late last month, the company announced negotiations for a binding agreement were beginning with Sha Steel, the largest private steel company in China, which would then form part of a security package to finance operations.
To keep transport costs down, the company intends to build a slurry pipe to a floating port near Wallaroo.