On December 12, Australian hematite iron ore producer Mount Gibson Iron Limited announced the recommencement of construction and development at its Extension Hill direct ship ore project in Western Australia. Construction and development is scheduled to be completed within 15 months incurring AU$80 million (US$73.91 million) of capital expenditure.
According to the announcement, Mount Gibson has executed life of mine ore sales agreements with both Shougang Concord International Enterprises Company Limited and APAC Resources Limited for all the ore production from Extension Hill.
Mount Gibson also has in place track access and rail haulage agreements to cater for at least 3 million metric tons per annum of production. All the rail wagons required to meet Extension Hill's production targets have been delivered and a AU$90 million (US$83.14 million) upgrade of the existing line between Geraldton and Perenjori by Westnet Rail Pty Ltd will be completed by June 2011, with ore shipments to commence thereafter.
"The recommencement of the Extension Hill project is a substantial investment in the Mid West region which enhances infrastructure, creates employment and creates opportunities for local communities. The recommencement of Extension Hill also signals the strength of Mount Gibson's balance sheet resulting from necessary capital raisings early in 2009, the very strong performance of our operations and a cautious optimism regarding iron ore demand", Mount Gibson managing director Luke Tonkin stated.