Fe Limited (ASX: FEL) announced that early works activities are ramping up with earthworks underway at the JWD Iron Ore Project in Western Australia to keep the project on schedule.
FEL said that with iron ore prices continuing to hit new highs, there is a strong demand for high-grade lump product such as at JWD, resulting in strong interest from potential offtakers.
The company said that changes were made to Mining Rights Agreement agreed with GWR Group Ltd (GWR) to extend Stage 1 timeline and simplify administrative and cashflow requirements.
FEL noted that it continues to attract experienced iron ore personnel to join its team, in spite of competitive market conditions.
Earthworks underway
The company reported that mining contractor Big Yellow commenced earthworks on site last week and expects to complete their component of the first stage of early works in the current week.
FEL said that it is working with Big Yellow to finalise the next scope of works to keep the project on schedule in advance of commencement of full mining operations, with mobilisation of the remaining mining fleet planned to occur this weekend.
Amendments made to Mining Rights Agreement
The company said that the Company and GWR agreed to a number of amendments to the JWD Mining Rights Agreement.
This included adjustments to methodology by which royalty and rehabilitation obligations are funded, in order to assist with FEL’s working capital during ramp up; and extending the timeframe by which FEL has to extract the first 300,000 tonnes of ore (from October 2021 to January 2022), providing additional operational flexibility to FEL.
In return, FEL has agreed to make a payment of $125,000 in cash, increase the royalty it pays by A$1 per tonne when the headline iron ore price is above US$145, and grant GWR an option to purchase up to 50,000 tonnes of JWD fines material from the mine gate at estimated cost plus A$10.
High-grade iron ore draw interest from offtakers
The company said that it has received a number of expressions of interest from high quality offtakers due to the strong for higher grade ores like that expected to be produced from JWD, and is currently evaluating them.
The 62% index price has continued to reach record highs and lump premiums remain close to their historical highs.
Management changes
The company said that it is continuing to attract experienced iron ore personnel to join its team.
FEL said that experienced mining professional Richard Kerrison is joining the team as the Registered Mine Manager, to head the JWD operations team with accountability for delivering safe and efficient production from the site.
The company also welcomed Alan Jepson as Commercial Manager. Alan will manage the company’s operational commercial and finance activities.
“In spite of a competitive market for people we are continuing to attract high quality mining professionals to our team”
Management comments
FEL Executive Chairman Tony Sage said: “It’s great to see work continuing at JWD and with the iron ore market as strong as ever at present, the timing couldn’t be better. In spite of a competitive market for people we are continuing to attract high quality mining professionals to our team.
We are pleased to have been able to agree some common-sense modifications to the JWD mining rights agreements and thank GWR for their assistance in doing so. We look forward to creating value for both sets of shareholders”.
Image Source: Fe Limited