Koolan Island, according to the company, is host to one of the highest quality iron ore deposits in the world and the western region of the Island is largely unexplored. The western area has, to date, never been drilled. Strongly developed hematite bearing ridges are known to occur through the area, including some spectacular coastal outcrops. The hematite ridges occur over a length of at least 3.5 km and appear to represent the fault offset extensions and structural extensions of both Main and Mullet-Acacia orebodies.

Mount Gibson’s Managing Director, Luke Tonkin, said, “The exploration potential of the western end of Koolan Island appears extensive. The medium term operational outlook for Mount Gibson has the potential to improve significantly, particularly if exploration of the western iron ore targets on Koolan Island is successful in defining quality, near surface hematite iron ore which could be blended with existing satellite ore sources.

“Since acquiring Aztec Resources in February 2007, Mount Gibson has fully embraced the Dambimangari Koolan Island Co-Existence Deed which provides the foundation of mutual benefit for the traditional owners and Mount Gibson. The Dambimangari people have developed a close working relationship with Mount Gibson and the in principle approval to explore the western iron ore targets on Koolan Island is a tremendous example of the core principles and spirit of the Co- Existence Deed at work,” Tonkin said.

Once Mount Gibson and the Dambimangari enter into a Heritage Protection and Exploration Agreement, a number of statutory and regulatory approvals, which are scheduled to take four to six months, will be required prior to accessing the area for exploration.

The company’s Koolan Island hematite mining operation is in Yampi Sound. Almost 70 million mt of high-grade (67% Fe) iron ore was mined by BHP from Koolan Island from 1959 to 1993. Hematite production at Koolan Island recommenced in early 2007 with the first shipment delivered in June 2007, and was expected to reach its targeted ore production rate of 4 million mt/y in 2010. According to the company, recent geological surveys and resource in-fill drilling programs confirm that Koolan Island has resources of 69.1 million mt grading 62.8% Fe, including reserves of 29.4 million mt at 63.7% Fe. This resource is located within four deposits, Main Pit, Acacia, Mullet and Barramundi.