Gindalbie Metals Ltd (ASX:GBG) has warned the costs of its $2 billion Karara iron ore project are likely to rise by around 30 per cent, as it looks to ramp up the project to save costs in an inflationary environment.
The higher price of labour, fuel and materials has been attributed for the expected cost blow out.
Chairman George Jones says all projects in Western Australia are currently subject to significant cost escalations and that this situation is almost certainly going to get worse as the resources boom strengthens.
However, Mr Jones says the company’s decision to accelerate the development of Karara by proceeding with approvals and site works, will largely avoid a more damaging environment for construction projects.
The Perth-based company has also today announced senior management changes, with non-executive director Tim Netscher stepping into the role of managing director and CEO, replacing Garret Dixon.
In the first six months of the 2011 financial year Gindalbie Metals reported a profit of $313,000, from a loss of $1.7 million a year earlier.
