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'Fine-tuning' needed at Roy Hill mine, but full production close, says CEO

Roy Hill Holdings Pty Ltd. believes it is close to reaching its full capacity of 55 million tonnes per annum of iron ore after lifting its run rate in July.

The A$10 billion Roy Hill mine has produced 45 million tonnes and shipped 43 million tonnes to date after shipping 4.45 million tonnes that same month.

The mine was expected to be exporting 55 Mtpa by the end of 2016, but issues with the port and processing plant delayed the ramp-up to full capacity until this year.

Roy Hill faced some "short-term equipment failures" as well as some difficulties crushing the harder ore early on in the development of the project, but believes it is back on track to reaching full production.

"We've got some minor fine-tuning to go, but we are comfortable that the beast will work well," CEO Barry Fitzgerald told reporters Aug. 7 on the sidelines of the Diggers & Dealers Mining Forum in Kalgoorlie, Australia.

"I think the 4.45 million tonnes in the month of July was very positive in the sense that it sends a very positive signal to the market. Clearly like any emerging business we need to make sure that we have this ability of both production and quality and performance."

Shipments are expected to dip in August due to a five-day port shutdown, but Fitzgerald is confident Roy Hill will soon reach its target capacity.

"We are comfortable that we are well on the path to overcoming the issues," he said. "Obviously as we get closer we'll find perhaps one or two other smaller ones, but we are far more comfortable that we know the beast, we know what we need to do and we're just stepping through and doing it."

Meanwhile, Roy Hill is open to potentially expanding production beyond the initial 55 mtpa.

"In terms of the original bankable feasibility studies, there's always been provision for an additional car dumper, an additional stacker reclaimer," Fitzgerald said. "So the physical layout of the process plant or the plant at Port Hedland is capable of doing that. In terms of the mine, obviously Roy Hill is a limited mine, but there's the capacity to exploit that more quickly through additional capacity or additional mining. We certainly, I think, will look at getting some flexibility beyond [55 mtpa] in the near-future."

Roy Hill Holdings is 70% owned by Hancock Prospecting Pty Ltd., the majority owner of the Roy Hill mine.