Aquila Says W Pilbara Iron Ore Resource Increases To 1.22 Billion Tons

Resources in Aquila Resources Ltd.'s (AQA.AU) 50%-owned West Pilbara Iron Project are 32% higher than previously reported, the company said Friday, increasing the total resource to 1.22 billion metric tons of iron ore.

In an updated resource statement, the company said it had added 296 million tons to the previous reported resource, with the average grade of the new resources at 56% iron.

Benchmark iron ore futures on the Chicago Mercantile Exchange grade 62%, but the figure for the new resource is only marginally below the 56.6% grade in the previously reported resource.

Aquila hopes to start exporting 30 million metric tons a year from the project from 2014, with costs of nearly A$6 billion to develop the mine, rail and port project shared 50-50 with its joint venture partner Baoshan Iron & Steel Co. (600019.SH), or Baosteel.

The company recently received conditional environmental approvals for the mine, rail and planned port at Anketell Point, close to Rio Tinto PLC's (RIO) Dampier and Cape Lambert iron ore ports.

The Pilbara accounts for around 40% of all iron ore traded by sea, but the difficulty of building infrastructure means the trade is currently dominated by Rio Tinto, BHP Billiton Ltd. (BHP) and Fortescue Metals Group Ltd. (FMG.AU).

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]