A scoping study has indicated that annual production of 500,000 tonnes per annum of washed coal to feed a single direct reduced iron plant would cost close to $20 million to set up, have an internal rate of return of 25% with payback of 2.6 years.
The second scenario considered annual production of 2 million tonnes pa with start up costs of $41.3 million and payback of 2.8 years with an IRR of 32%.
Aviva said the study indicated the company could become involved in the development of a substantial iron ore industry via the provision of cheap power and local reductant coal.
Adding further strength to the bottom line of the project is participation in a pig iron project which was not included in the study. The pig iron project could generate annual profits of $80 million per annum at current prices.
The project has a resource of 80Mt based on 9km of a possible 12.5km strike length, to a total depth of 130m. Coal from the project is sub-bituminous and is best suited to a domestic market.
The study indicated the project would be amenable to a dipline dozer conveying mining method.
Aviva said it would now enter negotiations with numerous undisclosed parties, which have shown interest in the project.
