aquilla and cape preston, page-2

Aquila's Pilbara project may cost $4.2b
6, 2008 - 10:51AM

Iron-ore explorer Aquila Resources says its planned iron ore port, rail and mining project in the Pilbara region may cost about $4.2 billion.

An initial study found the West Pilbara mine could produce 25 million tonnes a year starting from 2012, the Perth-based company said in a statement. The project is to be developed by the company's Australian Premium Iron joint venture with American Metals and Coal Industries, or AMCI.

Australian companies are developing iron mines to meet soaring demand for the ore used to make steel, led by China. Iron ore prices have risen for six consecutive years and Aquila said it may generate earnings before interest, tax, depreciation and amortisation of $1.4 billion a year.

Aquila will need to build 160 kilometres of rail and a new deepwater port at Cape Preston, costing a combined $1.8 billion, it said. Construction could begin in 2010.

Aquila rose as much as 1.6%, or 23 cents, to $15 on the Australian stock exchange and traded at $14.95 at 10am. The stock has jumped 56% this year, giving Aquila a market value of $3 billion.

"Significant opportunities exist to either minimise capital expenditure or maximise the utilisation of such infrastructure through joint development, third-party use or increased throughput,'' the company said in the statement.

Bloomberg