THE BOURSE WHISPERER: Western Desert Resources has signed a Memorandum of Understanding with Xstrata Zinc to investigate the feasibility of gaining access to the latter’s McArthur River mine loading facility at Bing Bong on the Gulf of Carpentaria.
The ability to access the Bing Bong facility would accelerate Western Desert’s plans to ship iron ore from its Roper Bar iron ore project located in the Northern Territory.
Proposed access road, Roper Bar project ‐ Bing Bong load facility. Source: Company announcement
The company said the being able to ship its product through the established facility would reduce the immediate need for investment in new pipeline infrastructure to Maria Island, which it had previously proposed.
“Accessing the Bing Bong facility would create significant capex savings and accelerate the export schedule for Western Desert Resources,” company managing director Norm Gardner said in an announcement to the Australian Securities Exchange.
“This could be the single most important development for the company since finding this project.
“Accessing an established loading facility would be a significant step in our transition from explorer to iron ore producer.”
The new thinking would result in Western Desert, subject to feasibility and necessary approvals, building an access road of approximately 160 kilometres from the Roper Bar project area to Bing Bong.
The company has estimated a reduction in capital expenditure of approximately $50 per annualised tonne of iron ore.
Access to Bing Bong would also accelerate Western Desert’s development time frame bringing the expected commencement date of iron ore to late 2012 to early 2013, 12 months earlier than the company had initially planned.
A feasibility study will be conducted to investigate whether the loading facility will be able to meet the initial needs of WDR to handle 2.5 to 3.0 million tonnes per annum.
The two companies have agreed to a three month study that will investigate the feasibility of Western Desert accessing the loading facility and constructing separate barging, storage and loading facilities.