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  • WPG Resources' Bob Duffin Discusses Giffen Well Project With Investors 0 comments
    Apr 8, 2013 3:40 AM

    WPG Resources (ASX: WPG) executive chairman Bob Duffin recently spoke to investors at a "Stars in 2013 Series" forum, highlighting a potential funding path for the Giffen Well iron ore project in South Australia.

    The full presentation can be ACCESSED HERE.

    WPG completed a Pre-Feasibility Study (NYSE:PFS) in March 2013 that has shown the capital required to develop Giffen Well is the lowest of any greenfield magnetite project in Australia.

    The development concept for the project includes provisions for an open pit iron ore mine and treatment at Giffen Well as well as an open pit coal mine and power station at Penrhyn, which is a key element of the PFS.

    Giffen Well will produce 5 million tonnes per annum of high grade (68% iron) magnetite concentrate with low levels of impurities, and a further 0.4 million tonnes per annum of low-cost haematite concentrate recovered from scavenging the magnetite tailings.

    Question from the floor

    How will the Giffen Well Project be funded and will it be sold and at what stage?

    Bob Duffin

    We have had absolutely no discussions with Arrium, as OneSteel are now called, in relation to this project.

    I do know, however, based on the Peculiar Knob experience that there's a cohort of companies out there who are risk averse to the point where they don't want to get involved with pre-development projects, but once all the Feasibility Studies are completed and permits are in place then they might come and knock on doors.

    So we're keeping that option open, but I stress that there is nothing in prospect at the moment.

    There are two elements to the funding. Firstly there is the cost of the Feasibility Study and then there's the cost of project development. We certainly won't be doing the latter absent a funding partner and we're seeking to do the former with a funding partner as well.

    Question from John Phillips, chief operating officer of Proactive Investors Australia

    How will owning your own power station work, if you have too much power can you actually on sell it to anyone else to achieve some cashflow?

    Bob Duffin

    We are quite conscious of the sensitivity of building a new coal fired power station in Australia and we approached the South Australian Government with a degree of trepidation when we told them that is what we wanted to do.

    The Minister, to be fair in a fairly informal circumstance, embraced what we're doing and furthermore asked us if we could provide power to other users and the town of Coober Pedy, which is paying 60 cents per kilowatt hour at the moment.

    We said yes we could and that's where we've left it. I think there is great opportunity for selling power to others, but we've completed the PFS on the assumption that we are the only user of power.

    Question from the floor

    The Arckaringa Basin was just the scene of a massive bubble with Linc Energy in a statement from the South Australian Government saying that there's $20 trillion worth of shale. Now you're in there, is there any chance of some accidental upside?

    Bob Duffin

    Firstly we would regard that statement by Linc Energy, and to be fair it really wasn't by Linc - it was by some other people in the U.S. - with a little bit of caution.

    Having said that, there is overlying tenure in that part of South Australia in relation to petroleum exploration, and while we have in the Arckaringa Basin the coal rights in the sense of being able to mine coal as a conventional coal mine, we don't have oil and gas rights, so I guess the answer is probably not.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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