Iron Ore Projects in Western Australia
Flinders Mines is currently focusing on iron ore development at its project in the Pilbara region of northwest Western Australia, situated 1,100km north of Perth. Tenement holdings and exploration in the region are dominated by Rio Tinto, BHP Billiton and Fortescue Metals.
Flinders has also acquired the Canegrass Project tenement package in the emerging Mid West Iron Ore Province of Western Australia.
PILBARA IRON ORE PROJECT
In November 2007, Flinders announced the discovery of a major iron ore target at the Flinders' 100% owned tenement E47/882 in the Hamersley Ranges of Western Australia.
Since this time Flinders has raised funds to follow up on this discovery, establish a Flinders Iron exploration group and obtain necessary exploration approvals and clearances to commence exploration.
Flinders Mines’ Pilbara iron ore project is located in the Hamersley Ranges approximately 70km northwest of Tom Price and 175 km south of Dampier, in the Central Hamersley CID Province. Access to the tenement is via Rio Tinto’s Pilbara Iron railway access road, which follows the railway north from Tom Price and then via well-graded pastoral and power line access tracks.
Exploration on site is supported by the Flinders Mines owned 20-person Blacksmith camp with comfortable air conditioned quarters and full satellite communications.
Drilling on the project commenced in July of 2008 and a maiden Inferred Resource of 476Mt at 55.4% Fe was announced on 1 April 2009. Further drilling in the 2009 campaign extended this resource to 511Mt @ 55.4% Fe.
In October 2009, WorleyParsons was awarded the contract to manage a Prefeasibility Study (PFS) for FMS’ Pilbara Iron Ore Project.
The project contains a current Indicated and Inferred resource of 748 million tonnes at an average grade of 55.4% Fe, including two specific mineralised styles identified in the PFS that contribute to the economic viability of the project’s Stage 1. These are a Direct Shipping Ore (DSO) product comprising Brockman Iron Deposit (BID) mineralisation, and a Detrital Iron Deposit (DID) style requiring minor beneficiation prior to export.
The 2011 drilling program has commenced, with two RC rigs initially focusing on a drill-out of the Delta deposit, to convert current Indicated Resource to Measured Resource status. Additional drilling will also be carried out on the recently intersected BID mineralisation on the valley flanks of Delta and assessing additional targets in this area.
One diamond core rig will be dedicated to a separate program aimed at sourcing additional material for ongoing geometallurgical testwork.
Key outcomes of the Pilbara Iron Ore Project Prefeasibility Study
The ore resource supports the production of more than 229 Mt of final fines product at an average grade of 60.7% Fe and 57.0% Fe for DID and BID products respectively.
- The BID product will be a DSO product with the DID product needing minor beneficiation prior to shipping.
- Mine planning studies have developed a 2.5:1 strip ratio for the 5 Mtpa start-up case that will produce a competitive product mix.
- Mine production is planned to commence at 5 Mtpa and be expanded after 5 years to 15 Mtpa and allows flexibility to commence at the higher production rate or increase production rate earlier in the mine life.
- Capital investment expenditure of A$488 million is estimated to be required to develop the Base Case, Stage 1, 5 Mtpa operation. The estimate includes owner’s costs, EPCM (“Engineering, Procurement, Construction Management”) and contingency costs.
- This expenditure includes provision for capital such that the future expansion to 15 Mtpa can be easily integrated into the facilities established under the 5 Mtpa case.
Financial modelling results
- Life-of-mine revenue over 20 years of greater than A$24.9 billion.
- A NPV after tax estimate of A$2,244 million calculated on a post-tax real basis at a Discount Cash Flow (“DCF”) rate of 10%.
- Cash operating costs of A$35.32 / tonne for product delivered Free on Board to port.
- An ungeared Internal Rate of Return (“IRR”) estimated at 40.8%.
- Forecast capital payback from completion of DFS of approximately 5.5 years.
> More information on the Pilbara Iron Ore Project |
