Gindalbie Metals Limited, emerging iron mining firm, projects to shell out $80.4 million in developing its Karara development project worth about $2 billion for the third quarter of this year, which is situated at the midwest area of Western Australia.

The company projects to grant new equipment, construction, and services contracts worth about $300 million for the following quarter of current fiscal year.

This will bring the Karara project commitments to about $1 billion after awarding equipment orders worth $700 million in the previous quarter ending in June.

Gindalbie Metals has joined the call of other mining firms, that includes Fortescue Metals Group Ltd, for magnetite ore to be excluded from the Gillard administration's proposed MRRT (Mineral Resources Rent Tax).

"Gindalbie has begun consultations with government officials in an attempt to have magnetite exempted from the MRRT," Gindalbie Metals stated on Tuesday.

"Gindalbie believes the Karara project should be exempt from MRRT because as a magnetite project, a large amount of value-added processing is required to produce a premium iron ore concentrate.

"In this regard, Karara is more comparable to a nickel or bauxite project, both of which have been exempt from the MRRT."

However, if magnetite ore was not excluded from the MRRT, its effect on the Karara project would still be insignificant, Gindalibe Metals remarked.

According to the Perth-based mining firm, this is "because of the low value of the magnetite ore prior to processing if the taxing point is consistent with government advice that it will be at the point the resource is mined".

Hematite iron ore production is projected to commence in Karara by the second quarter of 2011, and to be followed by production pellet iron ore and magnetite concentrate by the third quarter of the same year.

Gindalbie Metals' shares were down by 1.96 per cent, or two cents, at $1.00 by 1513 AEST.