WPG Resources' SA iron mine affordable at $1.58 billion WPG Resources' Giffen Well iron ore mining project would cost $1.58 billion to build and would employ 550 people for as long as 30 years. The company has completed a pre-feasibility study into the project in central South Australia which indicates it could produce a high quality iron ore concentrate for $71.48 per tonne. The $3 million study shows the project is affordable, executive chairman Bob Duffin said, and would have the lowest capital cost of any greenfields magnetite iron ore project in Australia. "The base case scenario for the project includes the construction of an open pit iron ore mine and magnetite concentrator at Giffen Well, an open pit coal mine and power station at Penrhyn that will supply low cost energy to the iron ore operation, local services and infrastructure, a rail spur line that will connect to the Central Australian line near the Carnes siding, and the construction of rail receival, storage and outloading facilities on the company's land at Port Pirie," the company said. The life of the operation from mining and treating the main lode only at Giffen Well is 30 years. There are two other lodes and an oxide zone at Giffen Well which represents significant upside potential from the base case studied. The mine would produce 5 million tonnes of 68 per cent iron concentrate per year, plus 400,000 tonnes of sought-after hematite iron ore. Mr Duffin said there was "little doubt that the project is feasible." "The operating costs are in line with our previous estimates for Peculiar Knob, which we sold as part of a package of assets to OneSteel Limited (now Arrium) for approximately $320 million in 2011, and which is now in production," he said. We do not need to build an enormous mine and treatment plant in order that the cashflows will support very expensive new port developments, or new slurry pipelines. To our knowledge, the capital required for the development of Giffen Well is the lowest of any greenfield magnetite project in Australia, and perhaps the world. Mr Duffin said expressions of interest had also been received from credible institutions for the provision of off balance sheet power solutions. "The project when in production will provide 550 new, long term jobs in this remote part of South Australia," the company said. Up to 800 persons will be employed in the construction phase. Production is targeted to commence in 2017. WPG shares closed 1.1c lower at 8.4c yesterday.