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Macarthur Minerals plunges despite reduced cost estimates at Ularring project

Last updated: 19:14 23 Jan 2014 GMT, First published: 20:14 23 Jan 2014 GMT

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Macarthur Minerals (TSX:MMS)(OTCQX:MMSDF) shares plummeted over 17% in Toronto on Thursday even after the company revised the cost estimates for its Ularring hematite project in western Australia lower. 

The company told investors in a statement released earlier today that over the past year, it has de-risked major project delivery areas like exploration, permitting and port access, positioning Macarthur to quickly advance the asset as resource markets recover. 

After releasing the project's prefeasibility study in September 2012, the company has since conducted ongoing work, and has made certain revisions to the report based on its continued reevaluation. 

This includes a reduction in the estimated operating cost estimate to A$68 per tonne shipped free on board from A$78.14 per tonne, an increase in the annual production tonnage from 2 million tonnes to 4 million, and the development of a dedicated private haul road route for which it has secured tenure. Capital costs were also reduced to A$226.4 million from A$262.7 million.

The company said the slowdown in the mining and transport services industries in western Australia last year resulted in anticipated "core cost savings in the areas of mining, road and rail transport".

Macarthur also said that further metallurgical testing during 2013 has opened up the possibility for those iron ore resources that are more amenable to gravity separation to be mined and processed separately from ores that beneficiate best from magnetic separation. This approach, during the first two to three years of mine production, could result in lower capital and operating costs compared to those estimated in the 2012 report, the company said. 

The 2012 study outlined a wet beneficiation process that would produce a 60% iron sinter fines product. 

"The work completed during 2013 is expected to further enhance the potential of the project," said chairman and CEO, Alan Phillips. "Even without fully detailed revised economics, this work has enabled us to further fine tune and adjust our strategy."

The company said that no new economic assessment has been undertaken as of yet, with a full reassessment to be included as part of the feasibility study, which Macarthur is planning to finish this year. 

Its stock tumbled over 17% on Thursday afternoon, to 21.5 Canadian cents. 

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