A new Pilbara iron ore mine appears to be shaping up for Gina Rinehart’s Hancock Prospecting, after her Roy Hill cleared its debts and began to deliver big dividends.
Roy Hill paid off its $US7.2bn debt load and is now set to be the biggest single contributor to Hancock Prospecting’s ever-growing wealth, after paying a $475m dividend at the end of October.
But Mrs Rinehart’s Pilbara ambitions do not end at Roy Hill, the Rio Tinto-operated Hope Downs mines, or the smaller — but profitable — operations acquired through Atlas Iron.
While Mrs Rinehart’s Hancock Prospecting is traditionally coy in talking about its future projects, this year’s public release of the company’s financial results includes a tantalising glimpse of a new mine taking shape for Mrs Rinehart.
Among its development projects, Hancock listed drilling at its Mulga Downs project. Its exploration team drilled 95,000 metres during the year and expanded the resource at the project by 290 million tonnes. Hancock did not give further details on the project.
But it first outlined plans to build a mine on Mrs Rinehart’s Mulga Downs pastoral property, only 3.5km from the station’s homestead, back in 2013.
Documents filed with WA’s environmental watchdog show only a small operation was planned — about 5 million tonnes of ore a year would be mined, and only about 14 million tonnes in total. But Mulga Downs was set aside in 2015 as the iron ore price crumbled and the project was caught up in litigation between Mrs Rinehart and her estranged children over the ownership of its core tenements.
Documents show Hancock reopened its exploration camp in mid-2018 and the size of the project appears to have grown exponentially since drill rigs returned.
If Hancock’s latest results are referring to an extension of the original project, it has expanded the mineral resource at Mulga Downs more than sevenfold in the last few years.
Environmental documents show the 2013 project contained only 35 million tonnes of iron ore grading 58-59 per cent iron. It now says another 290 million tonnes was added in the last year alone.
Even a resource of more than 320 million tonnes would probably not sustain a major operation — Roy Hill was launched with more than a billion tonnes of ore grading better than 55 per cent, to underpin its 17-year mine life.
But Roy Hill needed equity partners to contribute to its costs and lenders prepared to stump up $US7.2bn to build its port, rail and mine infrastructure.
With Roy Hill debt free and looking to expand, the real hard yards have been done. Mulga Downs is close enough to use Roy Hill’s railway line, and spare capacity at Port Hedland is also a possibility.
And with cash pouring into Hancock’s coffers, if the deposit stands up Mrs Rinehart could easily afford to build an iron ore mine she could truly call her own.
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