FMG gives go-ahead to Eli­wana project

North West Telegraph - - Telegraph News - Stu­art McKin­non Fortes­cue Met­als Group chief ex­ec­u­tive Nev Power ad­dresses share­hold­ers at the com­pany’s AGM to­day.

Fortes­cue Met­als Group has opted for a $US1.5 bil­lion de­vel­op­ment of its Eli­wana de­posit to re­place the de­plet­ing Fire­tail mine as part of a long-term plan to open up its mas­sive land­hold­ings in the west Pil­bara.

The com­pany re­vealed yes­ter­day it had cho­sen Eli­wana, west of its ex­ist­ing Solomon Hub, in favour of the mas­sive Nyid­inghu de­posit, which lies south of its Chich­ester Hub, with the new mine ex­pected to be in pro­duc­tion by 2020.

Ad­dress­ing his last Fortes­cue an­nual gen­eral meet­ing be­fore his de­par­ture in Fe­bru­ary, chief ex­ec­u­tive Nev Power said it was a close call but the com­pany be­lieved Eli­wana of­fered more prod­uct op­tions, bet­ter cap­i­tal and op­er­at­ing costs, and quicker speed to mar­ket.

Eli­wana con­tains not just Brock­man-style ore, sim­i­lar to that mined at Fire­tail, but also the Marra Mamba ores pro­duced from the com­pany’s Chich­ester oper­a­tions.

“There’s 2.1 bil­lion tonnes of re­source al­ready iden­ti­fied there (Eli­wana), it’s highly prospec­tive and has great grades,” Mr Power said

“Of course, Nyidingu re­mains a very sig­nif­i­cant ore body for fu­ture de­vel­op­ment and this just means that, in tim­ing, the Eli­wana Western Hub project will come be­fore Nyid­inghu.”

FMG founder and chair­man Andrew For­rest said Nyid­inghu was a huge de­posit but Eli­wana ex­tended the com­pany’s oper­a­tions to the Western Hub, which he de­scribed as the great fron­tier for Fortes­cue.

“There’s ge­ol­ogy there that we haven’t had a chance to ex­plore. It’s highly prospec­tive,” he said.

“Ex­tend­ing in­fra­struc­ture out there will be one of Nev’s great lega­cies. You’ll see mine af­ter mine af­ter mine de­vel­oped off that.”

De­vel­op­ing Eli­wana, a 30Mtpa project with a 24-year mine life, will in­volve ex­tend­ing Fortes­cue’s ex­ist­ing rail line 130km west from its Solomon Hub.

Fortes­cue has the big­gest Pil­bara foot­print of the big iron ore min­ers and an in­ven­tory of 12 bil­lion tonnes of hematite ore and 8 bil­lion tonnes of mag­netite ore.

Ad­dress­ing the ques­tion of widen­ing dis­counts for Fortes­cue’s lower grade (58 per cent) ore, Mr Power said the com­pany’s prod­uct had be­come in­cred­i­bly valu­able in mar­kets out­side of China. “It is only in China that the very high pre­mi­ums are be­ing paid for the high-grade iron ore,” he said.

He said Fortes­cue wanted to grow its cus­tomer base out­side China and its eight big ore car­ri­ers of­fered a com­pet­i­tive ad­van­tage in re­duced ship­ping costs to mar­kets such as Europe.

Mr For­rest said Fortes­cue had re­sisted the temp­ta­tion to high­grade its min­ing oper­a­tions in re­sponse to the lower-grade dis­count, be­cause it would leave big por­tions of its ore de­posits non­com­mer­cial — an out­come that would be a tragedy for Aus­tralia.

Fortes­cue yes­ter­day named board mem­bers Mark Barn­aba and Sharon War­bur­ton as codeputy chair­man and chair­woman to Mr For­rest. Shares in the com­pany closed down 13¢, or 2.6 per cent, at $4.90 yes­ter­day.

Me­gan Pow­ell

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