Billion dollar deal for QR National

Iron ore producer Gindalbie Metals and freight haulage business QR National Freight have announced the signing of a billion dollar Rail Haulage Agreement for the Karara Iron Ore Project in Western Australia.

The deal, signed by the joint venture company Karara Mining and QR National Freight's subsidiary Australia Western Railroad, will see Australia Western Railroad transport up to 10Mtpa of magnetite concentrate and/or hematite direct shipping ore over a period of 10 years.

QR National Freight has had a long-standing presence in WA and currently employs about 1000 people in Western Australia.

With escalation, the agreement will generate approximately $900 million in revenue for QR National Freight.

Gindalbie's managing director Tim Netscher said the signing of a long-term commercial agreement with QR National freight represented a major milestone for the Karara Project.

"This is an important step in the long term commercial relationship between QR National Freight and the Karara Project and we look forward to working constructively and cooperatively into the future," he said.

In addition, Mr Netscher said that the work will bring vital infrastructure to Gindalbie's doorstep in the Mid West and enhance the opportunities to develop standalone projects on the Company's 1900sqkm tenement holding.

"Work on the Karara Project is moving very rapidly with approximately 1300 people currently working on the construction of the processing plant, mining operations and all of the supporting infrastructure such as the rail spur, high voltage power line, water pipeline and Geraldton Port," he said.

QR National Freight will invest in excess of $200 million in new locomotives, wagons and upgraded administration and maintenance facilities at the Narngulu East Facility near Geraldton.

Once ramp-up is completed, the rail haulage services provided by QR National Freight will involve four trains per day with 100 wagons per train.

Conditions precedent to the agreement include the signing of rail access agreements with rail owner Westnet, a direct agreement with Karara Mining's security trustee and Karara Mining obtaining the consent of its financiers to the final form of the agreement.

Karara Mining's tonnage obligations commence on a staged basis from January 2012 through to May 2012.

The joint venture company has also signed a separate Relationship Agreement with QR National Freight to work together on any future expansions.