CuFe Ltd (ASX:CUF) and subsidiary Wiluna Fe Pty Ltd have initiated the restart of mining operations at the 60%-owned JWD Iron Ore Mine in Western Australia, prompted by improving iron ore prices and strengthening economic activity in China post-lockdowns.
The company expects iron ore product to be ready for haulage to port by the end of the month, swiftly positioning itself to take advantage of iron ore prices that have climbed some 50% since operations at JWD ceased.
The JWD site team has also begun the process of recovering high-grade material from a waste stockpile on-site, crushing and screening it for trucking to port.
Optimistic 2023 will offer attractive pricing
“It’s pleasing to see the iron ore price back at levels that allow mining to recommence at JWD,” CuFe executive director Mark Hancock said.
“With the relaxing of Covid-related restrictions expected to drive economic activity in China and continued strong demand for our product from South-east Asia, we are optimistic that 2023 will offer a period of attractive pricing for JWD iron ore.
“This, combined with an improved cost base arising from falling fuel prices lowering sea freight and road haulage cost and improved stripping ratios favourably impacting mining costs, means Cufe is well placed as we move into the next phase of JWD operations.”
To cover any working capital or development funding needed for the JWD restart, CuFe has negotiated a US$2 million prepayment facility with its JWD offtake partner Glencore (LON:GLEN).
Hedge book and future sales
CuFe has begun to build a hedge book to cover future sales as part of the restart effort.
Positions have already been taken (based on the March quotation period) with 10,000 tonnes swapped at US$120.7 per tonne, and 20,000 dry metric tonnes (DMT) of collars entered with a floor price of US$110 per DMT and ceiling price of US$129.5 per DMT (based on 62% iron lump).
Lump premium is additional to this and remains floating at this stage.
A further 8-10,000 DMT of material recovered from waste stockpiles is expected to be loaded next week on a vessel shared with the neighbouring C4 project. That parcel is subject to a swap contract for February at US$116.50 per DMT, based on a purity of 62% iron.
The company is also contributing a parcel of 20,000 DMT of fines product to a joint ship with C4, which will load during February.
This material is about 58% iron, sourced from stockpiles which are economic to export presently given the lower freight rates and grade discounts that apply.