Fortescue Metals Group has decided to restart work on its $1.1 billion Kings mine following a bounce in iron ore prices and its recent raft of cost cutting and cash boosting measures.
Work at Kings will restart next month after the miner decided to shelve the project in September because of sagging iron ore prices.
"The recent improvement in iron ore prices and market outlook, along with a number of measures undertaken by Fortescue, including the sale of non-core assets, a reduction in operating costs and the restructuring of existing bank facilities, underpinned the decision to complete Kings in the new year," the company said in a statement.
"The resumption will enable a smooth transition of the construction workforce to Kings from the nearby Firetail deposit, which is ramping up to a production capacity of 20 million tonnes per annum by the end of the March 2013 quarter.
"With this decision the 40mtpa Kings deposit is on track to lift Fortescue's production capacity to 155mtpa by the end of calendar 2013."
Fortescue chief executive Nev Power said the board had carefully considered current market conditions and was confident of moving forward with development.
"We've made outstanding progress with the expansion of our Chichester operations and the development of the low cost Firetail mine," he said.
"We can now turn our attention to Kings, which will deliver Fortescue an additional 40mtpa of low cost production by December 2013."FMG shares were up 10.5 cents, or 2.41 per cent, to $4.455 at 7.40am.
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