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PrintPERTH-Pluton Resources Ltd. expects to become Australia's newest iron ore exporter by early next week after restarting production at a mine nearly 60 meters below sea level that is shielded from water by a wall of crushed rock.
Cash flow from selling the ore to Chinese steel mills will be used to fund more exploration at the Cockatoo Island mine in Western Australia state, which Pluton acquired from U.S. miner Cliffs Natural Resources Inc. /quotes/zigman/527698/quotes/nls/clf CLF -1.22% and Australia's Leighton Holdings Ltd. in October, Chief Executive Tony Schoer said.
Weaker iron ore prices have crimped the plans of many small Australian miners of late, but Pluton hopes to establish a profitable operation that will extend well beyond its initial two-and-a-half year life if further drilling finds new reserves, Mr. Schoer told Dow Jones Newswires in an interview.
"We will at least double the mine life for the open cut and we'll assess the underground mining potential starting next year," he said.
Pluton and its 50% joint venture partner, Hong Kong trading house Wise Energy Group, plan to produce 3 million metric tons of iron ore over 30 months for export to China.
A vessel is due to berth later this week and depart the island either Sunday or Monday with a cargo of iron ore worth around US$4 million, Mr. Schoer said.
The initial shipment of 43,000 tons, bound for the Chinese port of Rizhao in the eastern province of Shandong, is expected to attract a roughly 10% discount to current iron ore spot prices due to a lower iron content. But by next year the venture should receive the full market price as grades improve, Mr. Shoer added.
After tumbling below US$90 a ton in September on worries over China's cooling economic growth rates, the iron ore price has partly rebounded to its current level around US$116 a ton.
Pluton has forecast operating costs of around A$51 a ton and by late next year aims to be shipping three cargoes a month as a new ore zone is accessed.
It also hopes to start producing lower-grade iron ore from its fully owned Irvine Island operation by either 2015 or 2016, Mr Schoer said, adding that the timetable depends on environmental approvals from the Western Australian Government. (Source: MarketWatch)
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