Ownership: Mount Gibson Iron Ore (100%) Australian Royalties Corporation (Royalty)
The Koolan Island mine is an iron ore operation in Yampi Sound, off the northern Kimberley coast of WA. Like neighbouring Cockatoo Island, Koolan Island holds deposits of high-grade iron ore and has been mined since the late 1940s.
Almost 70 million tonnes of high-grade iron ore was mined by BHP Billiton from Koolan Island from 1959 to 1993.
When BHP ceased mining operations on the island in 1993 they flooded the main pit to the ocean by blasting part of the hanging wall. This has meant that the pit has been filled with about 10 billion litres of seawater, with a significant marine eco-system forming within the bounds of the former working pit.
Recent geological surveys and resource in-fill drilling programs have confirmed that Koolan Island has resources of 67.7Mt grading 62.8 per cent iron, including reserves of 30.2 million tonnes at 63.8 per cent iron. This resource is located within four deposits, Main Pit, Acacia, Mullet and Barramundi.
Koolan iron ore is very high quality and low in impurities, and Mount Gibson Iron planned to undertake dewatering operations in order to allow the rich ore reserves to be mined once again.
Hematite production at Koolan Island recommenced in early 2007 with the first shipment achieved in June 2007 and was expected to reach its targeted ore production rate of 4Mtpa by December 2011. Seawall construction, dewatering and footwall rehabilitation was scheduled for completion in late 2011, which will allow full access to Main Pit. Main West cutback has commenced, allowing early ore source from Main Pit.
Current ore production is from the satellite deposits at Acacia, Mullet and Barramundi, and access to the Main Pit deposit has also commenced.
Koolan Island presents a number of organic growth opportunities owing to high prospectivity, with identified untested hematite outcrops, and Main Pit ore surface extensions along strike and down dip providing outstanding synclinal and anticlinal structural targets.
Operating. In October 2011 Mount Gibson agreed settlement terms on behalf of its two operating subsidiaries with Rizhao Steel Holding Group in relation to two arbitral awards delivered in Mount Gibson's favour in August 2010. Rizhao Steel was ordered to pay Mount Gibson US$114 million in damages plus interest of 6 per cent from the date of award plus Mount Gibson's costs of the arbitration.
Under the part of the settlement relating to Koolan Island, Rizhao will purchase 1,700,000t of mineralised waste material from Koolan Island during a two to three year period. As a consequence, Mount Gibson will realise near term value for material that had been categorised as waste. Total cash proceeds before crushing; ship loading and royalty costs would be about US$82 million.