October 07, 2008

FMG Pilbara project 90% complete

Fortescue Metals Group Limited advised that 90.2% of the overall iron ore project at its Pilbara site was completed and remained on track for shipping in mid May. However, the firm said the final cost had been assessed at AUD 2.796 billion, AUD 31 million higher than the previous month.

Fortescue advised that the main contributor to the higher cost was a AUD 22.2 million adjustment to the direct costs at the mine site and a AUD11.7 million adjustment for rail costs.

Fortescue in a statement said that “There was also a recovery of AUD 4.6 million following the decrease of certain EPCM services no longer required. While these costs have effectively used up all of the original contingency provisions, project liquidity will be provided through the company’s capital management program which includes operating leases.”

Fortescue said that its rail works were 91% completed and noted that significant progress had been made within the rail program that management does not see the rail project causing any slowdown for shipment in mid May. It added that “The focus now is very much on commissioning and particularly on the port assets as the company starts dry commissioning some of the product handling in loading systems at the port.”

Fortescue said port works were 93% completed with permanent power connected to the port facility substation on March 16th 2008.