Gunson Resources forges ahead at Coburn Zircon project

Gunson Resources (ASX: GUN) is making steady progress with the Coburn Zircon Project in Western Australia, with supply arrangements and offtake and financing agreements being made.

A Front End Engineering, Design and Approvals (FEED) study agreement has been signed with DBP Services to provide the design, construction and capital cost information for a 110 kilometre long lateral gas pipeline to the proposed Coburn power station.

The pipeline will link to the main Dampier to Bunbury Natural Gas Pipeline to the east of the power station.

The FEED agreement also covers environmental and other approval requirements, along with operational information and indicative tariffs.

DBP is an associate of the DBNGP Nominees, which owns the Dampier to Bunbury pipeline.

Gunson has selected Cummins Power Generation as the preferred supplier of the natural gas-fired power station, on a build, own, operate, transfer basis under a standard power purchase agreement.

Cummins has proposed to provide a competitive electricity supply solution with forecast unit power costs well below those assumed in the Definitive Feasibility Study that was released in January 2010.

Gunson is also planning to start drilling  a 180 metre deep bore to supply water for the construction of the proposed mine access road on January 10, in a move to minimise construction time on the project.

Estimated construction time following full development funding is 85 weeks.

Drilling and pump testing of the bore is expected to be complete in late January.

Ilmenite offtake agreement

Final internal approvals for an ilmenite offtake agreement between Gunson and a major chloride grade ilmenite consumer are underway.

The two parties are well advanced towards finalising the sale agreement for Gunson’s share of production from the Coburn project.

Funding partner due diligence

In November 2011 Gunson signed a non-binding term sheet with a major East Asian industrial group, allowing the major to earn a large minority joint venture interest in Coburn.

The deal is well advanced in due diligence investigations, with completion of due diligence and the agreement of detailed documentation targeted for February 2012.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/23829/gunson-resources-forges-ahead-at-coburn-zircon-project-23829.html