SHARES in Gindalbie Metals jumped as much as 24% in morning...

SHARES in Gindalbie Metals jumped as much as 24% in morning trade on news it is targeting around 80-100 million tonnes of direct shipping-quality hematite iron ore through an expanded regional exploration program across its tenement portfolio in Western Australia’s Mid West region.

The stock gained as much as 26c to hit an intraday high of $1.36 with almost 9 million shares changing hands by noon EST.

Perth-based Gindalbie said in today’s announcement that the board had approved a $A10 million regional exploration budget for calendar 2008 after regional exploration confirmed a pipeline of 12 drilling targets on its wholly-owned and joint venture tenements.

The company confirmed several areas of new hematite enrichment within its tenement position after completing a geological mapping and surface sampling program in 2007 and early 2008.

Several of these targets have the potential to host mineralisation containing 5-15Mt of direct shipping ore based on their surface expression of more than 50% iron rock chip samples, the company said.

The company’s geologists believe that small-to-medium-sized direct shipping orebodies represent the principal exploration target within the company’s Mid West tenure.

Key DSO targets include the Shine and Gap prospects within the Warriedar JV (60%-owned by Gindalbie, 40%-owned by Royal Resources) with drilling expected to begin shortly.

“Continued mapping and sampling programs during the March Quarter show that hematite enrichment extends north of Shine onto tenements owned 100 percent by Gindalbie,” Gindalbie said.

“The additional 600 metres of strike length mapped contains several pods of hematite at surface in similar stratigraphic positions to those discovered at Shine in late 2007.”

Gindalbie said work applications had been approved and drilling would begin in May with first results available in the June 2008 quarter.

Meantime, at the Porcupine prospect, mapping and sampling shows areas of surface hematite enrichment with surface rock chip samples ranging between 50-62% iron over an area some 5km long and up to 300m wide, while in the Karara JV tenure, outcrops of DSO grade hematite have been discovered at the Johnnys, Karara West, Hinge and Brac prospects.

Gindalbie’s managing director Garret Dixon said the new DSO exploration targets were an exciting opportunity for the company to grow its hematite business to support a significantly higher future level of production of DSO.

“We have recently announced the commencement of a feasibility study targeting a 50% expansion in our magnetite business to a start-up production rate of 12 million tonnes per annum,” Dixon said.

“This provides an exciting parallel growth opportunity in hematite which has the potential to underpin significant growth in our initial level of hematite production of 2 million tonnes per annum from Karara.

“It is exciting too to see that several of the targets occur on ground that is 100 percent-owned by Gindalbie.”

Dixon added many of the key prospects encompassed by this 80-100Mt DSO exploration target were located outside of any proposed conservation park and in areas identified in the Government’s recent Strategic Review Report of the banded iron formations of the Mid West and Goldfields as favoured areas for mining development.

“We are confident of being able to start producing hematite in 2009 as the basis of a long-term DSO business in this region that will continue to grow for many years as new iron ore discoveries are made across the company s extensive landholding,” he said.