CuFe says the price is right to restart JWD iron ore project

Iron ore prices have jumped around 50% since CuFe suspended mining at its JWD iron ore project in WA – and the price is looking right for a restart.

The company is confident that 2023 will be a year of attractive pricing for ore from the project.

“It’s pleasing to see the iron ore price back at levels that allow mining to recommence at JWD,” CuFe (ASX:CUF) 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 SE 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.”

Ore ready for haulage this month

In addition to planning the restart of mining the JWD site team has continued to recover high grade material from a waste stockpile on site, crushing and screening it for trucking to port – which is expected by the end of the month.

A further 8-10,000 DMT of this material 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 DMT, basis 62% Fe.

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 circa 58% Fe and is being sourced from stockpiles which are economical to export presently given the lower freight rates and grade discounts that apply.

Building a hedge book

As part of underpinning this restart CuFe has commenced building a hedge book to cover future sales.

To date positions have been taken, basis March quotation period, with 10,000 tonnes swapped at US$120.7 and 20,000 DMT of collars entered with a floor price of US$110 DMT and ceiling price of US$129.5 DMT, basis 62% Fe.

Lump premium is additional to this and remains floating at this stage.

To assist in funding the working capital associated with the ramp up of activity the company has also negotiated a US$2m prepayment facility with its JWD offtake partner Glencore.

This article was developed in collaboration with CuFe (ASX:CUF), a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.