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Roy Hill jumps hurdles to finally hit production rate target

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Roy Hill jumps hurdles to finally hit production rate target

Australian iron ore producer Roy Hill Holdings Pty Ltd. believes the issues with its namesake mine that delayed the ramp-up to its target production rate are finally in the rearview mirror.

The company has begun 90-day performance testing, which for the first time saw it hit its 55 million-tonnes-per-year run rate with the shipping of 4.84 million tonnes from the Roy Hill mine in September.

However, CEO Barry Fitzgerald stressed that it was a one-off and Roy Hill has not technically achieved full ramp-up.

"We need to demonstrate that we have achieved 55 million tonnes for a certain rate and then we need to achieve other parameters for the full 90 days," Fitzgerald told reporters Oct. 4 on the sidelines of a Western Australian Mining Club event in Perth.

"We are going well on that. The 90 days basically brings us through to December. If we successfully pass that, fundamentally we are probably at 55 million tonnes."

Roy Hill faced issues with the blending of the ore, which pushed the ramp-up to full production out by about 12 months. The company had been aiming to reach its final run rate by the end of 2016.

"The reality was that the orebody had a few more difficulties than we thought," Fitzgerald said. "The material was much harder, there were more difficulties in blending and getting the exact blend between grade and physical properties. We had significant wear which we hadn't foreseen."

To resolve the issue, Roy Hill introduced jaw crushers to better crush the ore at a more realistic wear rate, and it modified its approach to mining and materials handling.

"Those problems are solved," Fitzgerald said. "We know what the issues are and we now believe we are out to the point."

Roy Hill believes it has also allayed the concerns of its customers following recent meetings.

"The change of putting the jaw crushers in has allowed us a much more consistent feed," he said.

"I think we've been able to explain to the customers that the earlier problems we had was where we perhaps didn't meet our challenges, but certainly if they look at the data for the more recent period, there's been a significant change and I think both our variability and our reliability is now back where they'd expect it to be."

Roy Hill now plans to spend the next couple of years focusing on optimizing production capacity and grades. Fitzgerald said the company has a number of opportunities to increase the grade of its ore.

Hancock Prospecting Pty Ltd. owns 70% of the Roy Hill mine. The other partners in the projects are POSCO, Marubeni Corp. and China Steel Corp.