PERTH (miningweekly.com) – A preliminary feasibility study (PFS) for iron-ore developer WPG Resources’ Giffen Well project, in South Australia, has proven the project to be economically viable.

The base case scenario for the project included the construction of an openpit iron-ore mine and a magnetite concentrator at Giffen Well, as well as an openpit coal mine and power station at Penrhyn, which would supply low-cost energy to the iron-ore operation.

The Giffen Well project would produce some five-million tons a year of high-grade magnetite concentrate, with low levels of impurities, and a further 400 000 t/y of low-cost hematite concentrate recovered from scavenging the magnetite tailings.

The magnetite deposit would be mined at a rate of 13-million tons a year, and the operation was expected to have a life-of-mine of some 30 years.

Concentrates would be railed to Port Pirie for shipment.

Meanwhile, the Penrhyn coal deposit would be mined at a rate of 480 000 t/y, which would be washed and fed to a small 90 MW power station. Over the 30-year project life, less than 5% of the currently identified resource at Penrhyn would be mined, WPG said.

The company reported on Friday that the initial capital cost for the integrated project, estimated at some A$1.58-billion, with an additional A$153-million set aside for working capital, was the lowest of any greenfield magnetite project in Australia.

Capital costs could be further reduced by off-balance-sheet funding of the energy supply, the company said.

“There is little doubt that the project is feasibile,” said WPG executive chairperson Bob Duffin.

“The operating costs are in line with our previous estimates for Peculiar Knob, which we sold as part of a package of assets to OneSteel for around A$320-million in 2011, and which is now in production.

“The capital cost is about $300 per annual ton, a metric which is competitive with industry yardsticks,” he added.

Duffin noted that, to the extent possible, the scale of development had been set to align with the capacity of existing infrastructure.

“We do not need to build an enormous mine and treatment plant in order that the cash flow will support very expensive new port developments, or new slurry pipelines. To our knowledge, the capital required for the development of Giffen Well is the lowest of any greenfield magnetite project in Australia, and perhaps the world. Our project is affordable.”

Production has been slated to start in 2017 and Duffin said the company was now in the process of assessing funding alternatives for the project after receiving expressions of interest from institutions for the provision of off-balance-sheet power solutions.