Fortescue Metals Group Ltd.'s shares were down 8.2% in afternoon trading on the ASX after the company said May 22 that it approved the US$287 million development of the Queens Valley mining area at its Solomon Hub iron ore operations in Western Australia's Pilbara region.
The development of the Queens Valley mining area will allow the company to maintain production of the low-alumina Kings Fines product, which Fortescue supplies to its customers in China, Japan and South Korea.
Queens Valley is estimated to have a life of 10 to 15 years, and has all environmental and heritage approvals to start the development, according to Fortescue.
The development will include relocation of the Solomon Hub mobile maintenance facilities closer to the Queens Valley operation to reduce travel distances, lower operating costs and provide access to additional tonnes in the vicinity of the Kings ore processing facility, the company noted.
The capex will be spent over four years — US$10 million in 2019, US$151 million in 2020, US$98 million in 2021, and US$28 million in 2022.
Fortescue recently declared a fully franked dividend of 60 Australian cents per share, taking total dividends so far in fiscal 2019 to 90 cents per share.