IRON ore miner Gindalbie Metals has shipped its first load of high-priced magnetite concentrate from Geraldton, sending its struggling share price surging on a combination of growing confidence about its $2.6 billion Karara project and rising iron ore prices.
The shipment, which is the first big shipment of magnetite concentrate out of Western Australia, gives confidence in Gindalbie's infrastructure and its ability to move decent quantities of concentrate.
Magnetite requires more processing than the direct shipping hematite ore mined by Rio Tinto and BHP Billiton, but its end product, which is of a higher grade, attracts a premium.
Gindalbie's product, which contains 68 per cent iron, sells at Chinese ports at a 20 per cent premium to the benchmark 62 per cent grade ore ore fines that this week hit an eight-month high of $US144.90 a tonne.
At those prices, which most in the market expect to be fairly short-lived, the miner is making a cash margin of close to $US90 a tonne.
Gindalbie's shares rose 2.5c yesterday to 27.5c on the good news out of the project, which has previously suffered delays and cost blowouts.
The shares are now the highest since late November, before a surprise equity raising and estimated operating cost overruns sent shares tumbling to a seven-year low of 22c.
But they are still only about half the price they were at the start of last year.
Managing director Tim Netscher said the company was on track to ramp up to production of eight million tonnes of magnetite concentrate a year by April '13
To do so, much of the plant, including three of four production lines, still needs to be started.
The magnetite will add to the current rate of two million tonnes a year of direct shipping hematite ore to probably make Gindalbie the nation's fourth-biggest iron ore exporter after Rio, BHP and Fortescue.
This will be short-lived, though, if steelmaker and miner Arrium can meet its target of reaching 11 million tonnes a year in June.
-------------------------------------
Fri Jan 4, 2013 1:09am EST Matin Lakos, division director at Macquarie Private Wealth recently stated.. "Statistics showed iron ore shipments to China from Australia's Port Hedland surged 25 percent in December '12 from the previous month and total iron ore shipments in December jumped 20 percent to almost 26 million tonnes, the highest reading on record."
Iron ore prices have been in a steep ascent over the last three months and climbed to a 15-month high of $149.80 a tonne .IO62-CNI=SI on Thursday, thanks to demand from China.
Lakos said miners would continue to be supported by China's expanding demand for iron ore.
"We don't expect a lot more out of the iron ore price, but we do see a pick up in volumes taking place as China continues to rebuild stocks," he said. "That's good news for stocks like BHP and Rio etc."
GBG Price at posting:
31.0¢ Sentiment: Hold Disclosure: Held
