THE collapse in iron ore prices has claimed its first local victim — the Cairn Hill iron ore project in South Australia.
The operating company, Termite Resources, has been placed in to administration. Termite is owned 51 per cent by the ASX-listed IMX Resources.
The administrator is Martin Lewis of Ferrier Hodgson.
IMX said that all contractual liabilities for Cairn Hill mine were the obligation of Termite, except for a guarantee provided by IMX under the port handling services contract with Flinders Ports.
“This guarantee is capped at $3 million. IMX has held preliminary discussions with Flinders Ports and is confident that a mutually acceptable solution can be reached, should there be any claim under the guarantee,” the company said.
IMX said Cairn Hill’s administration had no impact on the exploration programs currently under way at its Ntaka Hill nickel exploration project, or its Kishugu gold prospect, in Tanzania.
Iron ore prices have crashed from last year’s (calendar) average of $US135 a tonne to less than $US90 a tonne for material grading 62 per cent iron.
Material of a lower grade trades at discount to the headline price for 62 per cent material.
IMX’s Cairn Hill partner is China’s Taifeng Yuan Chuang International. Cairn Hill Mine is 55 kms south-east of Coober Pedy. Production started in December 2010.
Mine capacity is 1.7 million tonnes per annum of a magnetite-copper product.
The joint venture reported negative cash flow from operations of $1.4 million1 in the March quarter. All up costs in the quarter were $104 a tonne.
On last year’s average prices, the margin for the business was healthy. But it has since been wiped by iron ore’s price fall.
Source: The Australian
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