BHP Billiton and Rio Tinto's Pilbara antagonist, Fortescue Metals Group continues to get bigger and more irritating.
Not content with muscling itself into the Pilbara iron ore province controlled by the big two, FMG and its founder, Andrew 'Twiggy' Forest, have been making themselves very unpopular with his bigger rivals.
He's now within a High Court challenge of getting access to the BHP railway line and facilities in the Pilbara; is taking contracts in China away from the big two and has just revealed a massive expansion of reserves in the area with the announcement yesterday of a find with more than a billion tonnes of iron ore.
That's on an ''inferred'' basis and the company says further drilling is being carried out to firm up the figure. A report is expected before Christmas.
The announcement of the discovery and proving up set the already strongly performing shares of FMG soaring. They rose almost 25% at one stage, before settling back to close 18.7% higher at $61.20.
At that level Mr Forrest is richer than James Packer. Based on Mr Packer's holding in PBL. Fortescue has a market cap close to $20 billion. Mr Forrest has 36% of FMG, Mr Packer, 38% of PBL. Mr Forrest is within sight of Rupert Murdoch who controls News Corporation, and Frank Lowy of Westfield.
The new deposit has "inferred resources of iron ore totally in excess of 1 billion metric tonnes,'' the Perth-based company said today in a statement to the ASX. Before the announcement Fortescue had 2.5 billion tonnes of iron ore resources.
Fortescue plans to start exporting iron ore to its Chinese steelmaker customers from its $2.6 billion next May.
Annual production at the company's Western Australian project is planned to start at 45 million tonnes, increasing to 110 million tonnes.
The company said the new discovery could contribute to a further planned increase to 200 million tonnes a year.
Developing the Solomon project will require a 100-kilometer railroad spur, which could cost as much as $300 million, join Fortescue's main railway line to the export terminal at Port Headland.
The company said the discovery in the Serenity area of its Solomon Project exploration area.
A total of 1.014 billion tonnes averaging 56 % iron has been defined as an inferred resource.
"Within this deposit Fortescue has defined 337 million tonnes of channel iron deposit averaging 56.7 per cent ferrous metal," Fortescue said in its statement to the ASX.
Fortescue said it is continuing to drill targets in the eastern portion of the Solomon Project area and expects to announce additional resources in that area before Christmas.
Fortescue said the discovery followed a drilling program aimed at providing sufficient resource with its Chichester deposits to support its planned production expansion to 200 million tonnes per annum.
"Metallurgical test work has commenced and preliminary results suggest that mineralisation is responding positively but further work is required to determine detailed process flow sheets, expected recoveries and product characteristics,'' it said.
Here's the statement:
"Fortescue Metals Group Ltd ("Fortescue") is pleased to announce an estimate of Inferred Resources of iron ore totalling in excess of 1 billion tonnes (Bt) for the Serenity area comprising the western one-third of its Solomon Project area.
"A total of 1,014 Bt averaging 56% Fe has been defined as an Inferred Resource in accordance with the JORC Code. Within this deposit Fortescue has defined 337 million tonnes (Mt) of channel iron deposit averaging 56.7% Fe.
"Fortescue is continuing to drill equally prospective targets in the eastern portion of the Solomon Project area and expects to announce additional resources in that area before Christmas. Serenity is located about 60 kilometres north-northwest of Tom Price in the Pilbara region of Western Australia.
"This discovery is a result of a drilling programme by Fortescue aimed at providing sufficient resource with its Chichester deposits to support its planned production expansion to 200 million tonnes per annum (mtpa).
"This initial mineralisation comes from the Serenity area which represents one third of its total tenements in the Solomon area. Metallurgical test work has commenced and preliminary results suggest that mineralisation is responding positively but further work is required to determine detailed process flow sheets, expected recoveries and product characteristics. This work is ongoing."
At the AGM last week Fortescue said that 'project construction continues to advance well across all fronts of port, mine and rail with "first ore on ship" scheduled for May 2008. As at 26 October 2007 the port works were assessed at 78% complete, mine works at 71% and rail at 62%.
* Mining activities commenced with some 900,000 tonnes of overburden removed to date and three Wirtgen surface miners now on site preparing for full scale mining of the ore body at Cloudbreak.
* Marketing initiatives are now focused on working through the logistics of Fortescue's shipping program.
* Exploration drilling continues at Solomon tenements with results reinforcing the basis of Fortescue's target mineralisation tonnages for these areas of 800 million tonnes of CID and 150 million tonnes of Brockman ore.
