Nullagine iron ore project returns to 6-million-tpy run rate, BC Iron says

BC Iron’s 75%-owned Nullagine joint venture (NJV) in Australia’s east Pilbara region has been ramped back up to a 6-million-tpy run rate in November.

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This came after operational adjustments were implemented to manage the clay that was encountered in certain mesas of its operations, which affected production and costs in the September quarter, the miner said in an update to the Australian Securities Exchange on Thursday December 11.

BC Iron is maintaining its sales guidance for Nullagine at 5.2-5.6 million wet metric tonnes (wmt) for the financial year ending June 30 2015.

Falling iron ore prices have led the Australian miner to focus on cost-cutting measures, including “proactive assessment of the mine plan, the termination of a higher cost road haulage contract, termination of a number of consultancy contracts, prudent management of all contractors and consultants, and redundancies at site and head office”.

Three non-executive directors have also resigned, while the remaining directors have agreed to a 10% reduction in fees.

These have allowed the miner to cut its forecast fob cash costs for the NJV to A$47-51 ($39-42) per wmt for the remainder of the 2015 financial year. This compares with its previous forecast of $55-59 ($46-49) per wmt for the financial year.

BC Iron said it has reduced the NJV’s capital expenditure for the 2015 financial year. Its share of it is now estimated at A$13-16 million ($10.8-13.3 million), which is A$10 million ($8.3 million) lower than its original guidance.

In October, BC Iron reported a 41% drop in iron ore sales during the September quarter due to operational adjustments being carried out at the Nullagine mine.

Fortescue Metals Group holds the remaining 25% stake in the joint venture.

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