Positive economics supporting a 25-year mine life with
Pre-Tax NPV of USD 579m (AUD
816m)
/THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES./
VANCOUVER, BC, April 11,
2022 /CNW/ - Macarthur Minerals
Limited (ASX: MIO) (TSX-V: MMS) (OTCQB: MMSDF) (the
Company or Macarthur) is pleased to advise that it
has filed the NI43-101 Technical Report for the Feasibility Study
of the Company's high grade magnetite Lake Giles Iron
Project. The results confirm that the project is economically
viable under long-term iron ore price forecasts.
The Feasibility Study confirms an economically viable project
producing 3 million tonnes per annum (dry basis) of high-grade
magnetite concentrate over a 25-year mine life. The project
will leverage off access to existing regional rail and port
infrastructure and deliver a premium concentrate (66% Fe) product
with low impurities. The Feasibility Study underpins a maiden
Mineral Reserve of 237 million tonnes as reported to the market on
15 March 2022 (See announcement
here).
The independent technical report, entitled "NI 43-101 Technical
Report and Feasibility Study, Lake Giles Iron Project, Menzies,
Western Australia" with an issue
date of April 4, 2022 was prepared in
accordance with the requirements of National Instrument 43-101 ("NI
43-101"). The technical report is filed under the Company's profile
on the System for Electronic Document Analysis and Retrieval
("SEDAR") website at www.sedar.com (filing date: April 11, 2022) and on the Company's website at
www.macarthurminerals.com.
The Company will now proceed with post study optimization work,
project development approvals and advancing project finance.
HIGHLIGHTS
- Feasibility Study completed for a 3 Mtpa (dry basis) magnetite
mining and processing operation.
- Feasibility Study supports a maiden Mineral Reserve of
237Mt for a 25-year mine life.
- Production of high-grade magnetite concentrate targeting 66.1%
Fe with minimal impurities suitable for pellet feedstock.
- Initial capital investment of USD
569m (AUD 801m) with mine
pre-production capital of USD 43.8m
(AUD 66.1m).
- C1 operating costs of USD 71.74 /
dmt (AUD 101.05/ dmt).
- Positive project economics with Pre-tax NPV of USD 579m (AUD 816m)
a 13% IRR and Post-tax NPV of USD
315m (AUD 443m).
The Feasibility Study was completed by independent engineering,
mining and geological consultants, Engenium now Stantec, CSA Global
and Orelogy Consulting.
Engenium now Stantec
Engenium now Stantec was engaged to complete the non-process and
process infrastructure inclusive of capital and operating cost
development for the Project.
Engenium now Stantec are experts in taking projects from
conceptualisation through to operation and handover. This
experience includes greenfield development, brownfield enhancement
and fully integrated mine-rail-rort project solutions. Engenium's
scope of services cover feasibility study management, construction
management, commissioning, engineering management and design,
procurement and contract management, and metallurgical test work
supervision. Since its inception in 2003, Engenium has undertaken
numerous projects across the iron ore sector in materials handling
and non-process infrastructure for clients including BHP, Rio
Tinto, ArcelorMittal, Atlas Iron and Amex Resources.
Orelogy Consulting
Orelogy was engaged to undertake the mine design from pit to ROM
and responsible for establishing the mineral reserve for the
Project.
Orelogy is a specialist mining engineering consulting company
with strong experience in open cut mine design across a range of
commodities including iron ore. Orelogy have a proven track
record in applying world class technical solutions to mining
projects at both the feasibility and operational phase. Orelogy has
a proven track record in innovative application to open pit
scheduling and optimisation. In 2008, Orelogy began development of
a proprietary open pit scheduling tool called Evolution. In 2014
Maptek, a world leading mining software provider, acquired
Evolution. Orelogy remain the power user of the software
tool globally and have an unrivalled experience in its practical
application.
Orelogy has significant experience in the iron ore sector in
Australia and internationally for
clients including Asia Iron,
Magnetite Mines, Polaris Metals, Crosslands Resources, Atlas Iron,
FMG, API JV, Australasian Resources.
CSA Global
CSA Global was engaged to complete the mineral resource
estimates for the Project.
CSA Global is a geological and mining consulting company
providing strategic mining services and advice to companies in the
international mining industry. CSA Global is an ERM Group
Company that has been providing services to its clients
across all mineral commodities and regions globally for over 35
years in most mineral commodities, with offices located in
Australia, Canada, Indonesia, Ireland, South
Africa, and the United
Kingdom. CSA Global's Resources services team provides
expertise in all aspects of geological and geostatistical modelling
applicable to exploration and mining.
The Feasibility Study developed the following optimised
'go-forward' project scope and design. These components are
presented in greater detail in the Annexure of this release.
Scope
|
Description
|
Geology
|
Banded Iron Formation
(BIF) magnetite mineralisation comprising Mineral Resources
classified as Measured - 53.9 Mt, Indicated - 218.7 Mt, and
Inferred - 449.1 Mt, reported above a 15% DTR cut-off
grade.
|
Mining
|
Open pit mining of
Measured and Indicated Mineral Resources of the Moonshine and
Moonshine North magnetite deposits. Mining rate approximately 9.68
Mtpa ore at an average LOM strip ratio of 2.6:1. Nine-month
pre-strip stage with production over approximately 25
years.
|
Metallurgy and Process
Plant
|
Definition of a flow
sheet comprising conventional crushing and grinding (HPGR, ball
mill and Vertimill), magnetic separation, followed by reverse
flotation to reduce silica in the final concentrate. Concentrate
production of 3 Mtpa (dry basis) with a size range of P80 38
micron.
|
Road Haulage
|
Road haulage by
contract operator utilising side tipping trucks from site to a rail
siding 93km south of the Project, along a private sealed haul
road.
|
Rail Haulage
|
Rail siding to be
constructed south of the Project adjacent to the open access
Eastern Goldfields Railway. Rail haulage to be undertaken by
contractor responsible for provision of rolling stock.
|
Port &
Shipping
|
Concentrate to be
shipped from the Esperance Port in southern Western Australia using
cape class vessels. Base case assumes Port operations will be
managed by the Southern Ports Authority via the existing iron ore
rail unloading circuit and ship loader. A new concentrate storage
shed is to be constructed to hold approximately 260kt of product.
Product is sold on a FOB basis with the offtake partner responsible
for shipping.
|
Power
|
Stationary power demand
of approximately 40MW from a standalone microgrid comprising a
combination of LNG gas reciprocating engines, solar array and
battery energy storage system (BESS) with renewable penetration of
33%.
|
Water
|
Project water to be
sourced from local paleochannel aquifer. Processing to be conducted
with saline bore water with final concentrate wash in desalinated
water to remove chloride and alkali metals.
|
Tailings
|
Mineral processing will
include a coarse dry stream to be co-located with mine waste and
wet tailings to be pumped to a tailings storage facility. Water is
to be recovered from tailings and pumped back for processing
use.
|
Support
Facilities
|
Supporting site
infrastructure includes a permanent accommodation village and
airstrip for FIFO workforce.
|
Mine Closure and
Rehabilitation
|
Mine closure has been
costed for incremental closure of mining areas with final closure
and remediation of non-project areas at the end of the
mine
|
The Feasibility Study confirms the commercial viability of the
Project to produce 3 Mtpa (dry basis) of high-grade magnetite
concentrate over a long mine life of 25 years from Proven and
Probable Mineral Reserves. The key production and financial
outcomes are presented in the following table.
Production
|
|
|
Ore mined
|
236.6 Mt
|
|
Waste mined
|
624.9 Mt
|
|
Total mined
|
861.5 Mt
|
|
Strip ratio
|
2.64
|
|
Concentrate
produced
|
74 Mt
|
|
Concentrate iron
grade
|
66.1
|
|
Plant
recovery
|
31%
|
|
Financials
|
AUDm
|
USDm
|
Sales
revenue
|
12,614
|
8,956
|
Operating
Expenses
|
8,116
|
5,672
|
Initial Capital
Expenditure
|
|
|
Construction
capex
|
801.1
|
568.8
|
Mining overburden
pre-strip
|
61.6
|
43.8
|
Total initial
capital
|
862.7
|
612.5
|
Future Capital
Expenditure
|
|
|
Sustaining
capital
|
203
|
144.1
|
Deferred capital -
Tailings
|
39.8
|
28.3
|
Capitalised
non-operational waste mining
|
355.7
|
252.5
|
Total future
capital
|
598.0
|
424.6
|
Closure
Expenditure
|
|
|
Closure and
rehabilitation
|
58.2
|
41.3
|
Total Operating Cash
Flows
|
3,625
|
2574
|
Taxes &
Royalties
|
|
|
Tax paid
|
873
|
620
|
Royalties
|
631
|
435
|
Valuation
|
AUDm
|
USDm
|
NPV (6%)
Pre-tax
|
816
|
579
|
NPV (6%)
Post-tax
|
443
|
314
|
IRR Pre-tax
|
13.0%
|
-
|
IRR Post-tax
|
10.1%
|
-
|
A detailed summary of the Lake Giles Iron Project Feasibility
Study is set out in the Annexure to this release.
Andrew
Bruton, CEO of Macarthur Minerals commented:
"The filing of the NI43-101 Technical Report for the
Feasibility Study of the Company's high grade magnetite Lake Giles
Iron Project is the final step in the completion of the Feasibility
Study process which the Company has pursued over the course of the
last 18 months. The Feasibility Study has been undertaken and
successfully concluded amidst the challenges of Covid-19 impacts,
and these results confirm that the Lake Giles Iron Project is
economically viable under long-term iron ore price
forecasts.
The Company will now proceed with post study optimization
work, project development approvals and advancing project
finance."
On behalf of the Board of
Directors, Mr Cameron McCall,
Chairman
For more information please contact:
Joe Phillips
|
|
Managing
Director
|
|
+61 7 3221
1796
|
|
communications@macarthurminerals.com
|
|
|
|
|
|
Investor Relations –
Australia
|
Investor Relations -
Canada
|
Advisir
|
Investor
Cubed
|
Sarah Lenard, Managing
Partner
|
Neil Simon,
CEO
|
sarah.lenard@advisir.com.au
|
+1 647 258
3310
|
|
info@investor3.ca
|
Qualified Person
Statement
Mineral
Resources:
The Mineral Resources for the Lake Giles Iron Project disclosed
in this press release have been estimated by Mr. David Williams, BSc (Hons), a member of the
Australian Institute of Geoscientists. Mr Williams, an employee of
CSA Global Pty Ltd and Independent Qualified Person, has reviewed
and approved the above technical information relating to the
Mineral Resource estimates contained in this release, in the form
and context in which it appears.
Mineral
Reserves:
The information in this report relating to Mineral Reserves is
based on information compiled by Stephen
Craig, a Fellow of the Australasian Institute of Mining and
Metallurgy. Mr Craig is a full-time employee of Orelogy Consulting
Pty Ltd. Mr. Craig has sufficient experience that is relevant to
the style of mineralisation and type of deposit under consideration
and to the activity being undertaken to qualify as an independent
Qualified Person as defined by NI43-101. Mr Craig consents to the
inclusion in the report of the matters based on their information
in the form and context in which it appears.
Company profile
Macarthur is an iron ore development, and lithium exploration
company that is focused on bringing to production its Western Australia iron ore projects. The Lake
Giles Iron Project mineral resources include the Ularring hematite
resource (approved for development) comprising Indicated resources
of 54.5 million tonnes at 47.2% Fe and Inferred resources of 26
million tonnes at 45.4% Fe; and the Lake Giles magnetite resource
of 53.9 million tonnes (Measured), 218.7 million tonnes (Indicated)
and 997 million tonnes (Inferred). Macarthur also holds 24 square
kilometre tenement area iron exploration interests in the Pilbara
region of Western Australia. In
addition, Macarthur has lithium brine Claims in the emerging
Railroad Valley region in Nevada,
USA.
Forward Looking
Statements
Certain of the statements made and information contained in this
press release may constitute forward-looking information and
forward-looking statements (collectively, "forward-looking
statements") within the meaning of applicable securities
laws. All statements herein, other than statements of
historical fact, that address activities, events or developments
that the Company believes, expects or anticipates will or may occur
in the future, including but not limited to statements regarding
expected completion of the Feasibility Study; conversion of Mineral
Resources to Mineral Reserves or the eventual mining of the
Project, are forward-looking statements. The forward-looking
statements in this press release reflect the current expectations,
assumptions or beliefs of the Company based upon information
currently available to the Company. Although the Company believes
the expectations expressed in such forward-looking statements are
based on reasonable assumptions, such statements are not guarantees
of future performance and no assurance can be given that these
expectations will prove to be correct as actual results or
developments may differ materially from those projected in the
forward-looking statements. Factors that could cause actual
results to differ materially from those in forward-looking
statements include but are not limited to: unforeseen
technology changes that results in a reduction in iron or magnetite
demand or substitution by other metals or materials; the discovery
of new large low cost deposits of iron magnetite; the general level
of global economic activity; failure to complete the FS; inability
to demonstrate economic viability of Mineral Resources; and failure
to obtain mining approvals. Readers are cautioned not to
place undue reliance on forward-looking statements due to the
inherent uncertainty thereof. Such statements relate to future
events and expectations and, as such, involve known and unknown
risks and uncertainties. The forward-looking statements contained
in this press release are made as of the date of this press release
and except as may otherwise be required pursuant to applicable
laws, the Company does not assume any obligation to update or
revise these forward-looking statements, whether as a result of new
information, future events or otherwise.
Cautionary Statement
The Feasibility Study referred to in this press release is based
on technical and economic assessments to support the estimation of
Mineral Reserves. There is no assurance that the intended
development referred to will proceed as described, and will rely on
access to future funding to implement. Whilst the Company
believes that it has reasonable grounds based upon the results of
the Feasibility Study to secure the required funding , at this
stage there is no guarantee that funding will be available, and
investors are to be aware of any potential dilution of existing
issued capital. It is possible that Macarthur could pursue
other 'value realisation' strategies such as a partial sale or
joint venture of the project. If it does, then this could
reduce dilutionary impacts for existing shareholders and improve
the Company's overall prospects for project funding. The production
targets and forward-looking statements referred to are based on
information available to the Company at the time of release, and
should not be solely relied upon by investors when making
investment decisions. The Company cautions that mining and
exploration are high risk, and subject to change based on new
information or interpretation, commodity prices or foreign exchange
rates. Actual results may differ materially from the results
or production targets contained in this release. Further
evaluation is required prior to a decision to conduct mining being
made. The estimated Mineral Resources quoted in this release
have been prepared by Competent Persons as required under the JORC
Code (2012). Material assumptions and other important
information are contained in this release.
ANNEXURE: Lake Giles
Iron Project Feasibility Study Summary
1. Project Overview
The Lake Giles Iron Project ("Project") is located approximately
175 km northwest of the town of Kalgoorlie in the state of
Western Australia. The Project is
owned by Macarthur Iron Ore Pty Ltd (MIO), a 100% owned subsidiary
of Macarthur Minerals Limited ("Macarthur" or "the Company").
The Project consists of a series of banded iron formation (BIF)
hematite and magnetite prospects with mineral resources of the
magnetite mineralisation defined for the Snark, Clark Hill North, Clark
Hill South, Sandalwood and Moonshine deposits, previously
reported in 2020 (CSA Global, 2020).
This scope of the Feasibility Study concerns the development of
the Moonshine North and Moonshine magnetite deposits. Feasibility
study level engineering was completed across all areas of the
Project's required infrastructure in addition to investigation of
existing regional infrastructure to be utilised. Associated capital
and operating costs were generated to develop a financial model and
define a maiden Mineral Reserve estimate.
2. Company Background
Macarthur is an Australian public company listed on the Toronto
Stock Exchange (TSX-V: MMS) and the Australian Securities Exchange
(ASX: MIO) and commenced exploration in 2006 for magnetite iron
resources and subsequently hematite iron resources on its Lake
Giles tenements in Western
Australia.
In 2020, the Company reported an updated Mineral Resource
estimate (CSA Global, 2020) that underpins this Feasibility Study
focussing on development of the Moonshine and Moonshine North
magnetite deposits.
3. Project Location
The Lake Giles Iron Project is located approximately 450 km
east-northeast from the coastal city of Perth and 175 km northwest from the
historic gold mining town of Kalgoorlie-Boulder, in the state of
Western Australia (Figure 1).
Unless otherwise stated, all coordinates referenced in this
document are in Geocentric Datum of Australia (GDA 94, Zone 50). The Project
tenements are centred at approximately 788,000 mE and 6,687,000
mN.
4. Geology
Regional Geology
Macarthur's tenements cover a portion of the Yerilgee Greenstone
Belt which is over 80 km in length and up to 10 km wide
and lies within the Southern Cross Province of the Yilgarn Craton.
The Yilgarn Craton consists of multiple lenticular greenstone belts
surrounded by variably foliated gneissic granitoids.
The greenstone belts consist of metamorphosed ultramafic, mafic
and sediments, including BIF which are Archean in age and are
commonly intruded by mafic, intermediate and granitic rocks.
Local Geology
The parts of the north-northwest trending Yerilgee greenstone
belt covered by the Project tenements comprise a layered succession
of Archean rocks. At the interpreted base of the succession is a
sequence of high-magnesium basalt flows more than 1 km thick
overlain by komatiitic ultramafic volcanic rocks with narrow
interflow BIFs and in some cases, other sedimentary rocks.
High-magnesium basalt lavas with occasional interflow BIFs
overlain, possibly unconformably, by sedimentary rocks (cherty,
silicified, pyritic and graphitic) are interpreted to form the top
of this sequence. In places, gabbroic sills interpreted to be
co-magmatic with the upper high-magnesium basalts, have been
intruded into the lower mafic and ultramafic lavas. The elongated
lens shaped Yerilgee belt is bounded by major north-northwest
trending fault/shear zones. The iron ore mineralisation consists of
secondary pisolite mineralization, primary magnetite mineralization
associated with un-oxidized BIF and ultramafic rocks, and
goethite-hematite mineralization associated with oxidized
BIF. (Figure 2)
5. Mineral Resources
The Mineral Resource estimate was completed by CSA Global Pty
Ltd (CSA Global) and previously reported to the market on
11 August 2020. Mineral
Resources for the Moonshine and Moonshine North deposits are
presented in Table 1.
Table 1. Mineral Resources – Lake Giles Iron Project,
Moonshine and Moonshine North, DTR >15%
Category
|
Tonnes (Mt)
|
Head Grades
(%)
|
Concentrate Grades
(%)
|
Fe
|
P
|
SiO2
|
AI2O3
|
LOI
|
DTR
|
Fe
|
P
|
SiO2
|
AI2O3
|
LOI
|
Measured
|
53.9
|
30.8
|
0.05
|
45.4
|
1.6
|
2.7
|
32.2
|
66.0
|
0.031
|
6.2
|
0.2
|
-0.7
|
Indicated
|
218.7
|
27.5
|
0.046
|
51.1
|
1.4
|
1.6
|
31.0
|
66.1
|
0.017
|
6.7
|
0.1
|
-0.1
|
Subtotal
|
272.5
|
28.1
|
0.047
|
50.0
|
1.4
|
1.8
|
31.2
|
66.1
|
0.02
|
6.6
|
0.2
|
-0.2
|
Inferred
|
449.1
|
27.1
|
0.047
|
52.6
|
1.0
|
1.4
|
29.2
|
65.0
|
0.026
|
8.4
|
0.1
|
0
|
|
Notes
|
1.
|
Figures contained
within the above Table have been rounded.
|
2.
|
Resource estimates are
based on block models constructed using three dimensional
geological wireframes.
|
3.
|
Mineral Resources are
reported from the block models above a DTR cut-off grade of
15%.
|
4.
|
Mineral Resources are
not Mineral Reserves and do not have demonstrated economic
viability.
|
5.
|
All Mineral Resources
are reported on a dry-tonnage basis.
|
6.
|
Mineral Resources are
reported inclusive of the Mineral Reserve.
|
6. Mineral Reserves
The Mineral Reserve estimate was prepared by Orelogy Consulting
Pty Ltd (Orelogy) based on the diluted resource block model. The
Mineral Reserve for the Lake Giles Iron ore Project is estimated at
237 Mt at an average grade of 28.2%
Fe and DTR of 31.3%, as presented in Table 2. The Mineral Reserves
have been disclosed to the market on 15
March 2022.
Table 2. Mineral Reserves – Lake Giles Iron Project,
Moonshine and Moonshine North, DTR >15%
Category
|
Tonnes
(Mt)
|
Head Grades
(%)
|
Concentrate Grades
(%)
|
Fe
|
SiO2
|
AI2O3
|
P
|
LOI
|
DTR
|
Fe
|
SiO2
|
AI2O3
|
P
|
LOI
|
Moonshine
|
Proven
|
34.2
|
28.1
|
51.6
|
1.2
|
0.04
|
1.7
|
30.5
|
65.9
|
6.8
|
0.2
|
0.02
|
-0.6
|
Probable
|
166.4
|
27.2
|
51.9
|
1.4
|
0.05
|
1.4
|
30.7
|
66.6
|
6.2
|
0.1
|
0.02
|
0.0
|
Sub-total
|
200.6
|
27.4
|
51.9
|
1.4
|
0.04
|
1.4
|
30.6
|
66.5
|
6.3
|
0.1
|
0.02
|
-0.1
|
Moonshine
Nth
|
Proven
|
17.8
|
35.4
|
35.4
|
2.2
|
0.06
|
4.2
|
34.3
|
66.5
|
5.0
|
0.3
|
0.03
|
-0.9
|
Probable
|
18.2
|
30.4
|
44.7
|
1.3
|
0.05
|
2.9
|
35.9
|
63.2
|
9.4
|
0.2
|
0.04
|
-0.3
|
Sub-total
|
36.0
|
32.9
|
40.1
|
1.7
|
0.05
|
3.5
|
35.1
|
64.8
|
7.3
|
0.3
|
0.05
|
-0.6
|
Combined
|
Proven
|
51.9
|
30.6
|
46.0
|
1.5
|
0.05
|
2.6
|
31.8
|
66.1
|
6.1
|
0.2
|
0.03
|
-0.7
|
Probable
|
184.7
|
27.6
|
51.2
|
1.4
|
0.05
|
1.5
|
31.2
|
66.2
|
6.6
|
0.1
|
0.02
|
-0.1
|
TOTAL
|
236.6
|
28.2
|
50.1
|
1.4
|
0.05
|
1.8
|
31.3
|
66.2
|
6.5
|
0.1
|
0.02
|
-0.2
|
|
Notes
|
1.
|
The Mineral Reserves in
Table 2 were reported in accordance with JORC Code 2012 and
Canadian Institute of Mining, Metallurgy and Petroleum "CIM
Definition Standards for Mineral Resources and Mineral Reserves"
(CIM, 2014).
|
2.
|
The Mineral Reserves
was evaluated using a 62% Fe benchmark price of USD100/dmt with a
20% premium for 65% Fe and concomitant Fe concentrate grade
bonus.
|
3.
|
Mineral Reserves are
based on a Feasibility Study utilising Mineral Resources from
Moonshine and Moonshine North deposits.
|
4.
|
Mineral Reserves
account for mining dilution and mining ore loss.
|
5.
|
A Davis Tube Mass
Recovery (DTR MR) cut-off grade of 15% was applied prior to
scheduling for 2022 reserves estimate.
|
6.
|
Proven Mineral Reserves
are based on Measured Mineral Resources only and Probable Mineral
Reserves are based on Indicated Mineral Resources only.
|
7.
|
Mineral Reserves are
reported on a Dry Tonnage Basis.
|
8.
|
Mineral Reserves are a
part of Mineral Resources.
|
9.
|
The sum of individual
amounts may not equal due to rounding.
|
7. Mining
Mining Method
The Moonshine and Moonshine North pits will be mined using
conventional open pit mining methods based on 350-400 t class
hydraulic excavators loading 180 t class rear dump trucks. The
operation is proposed using experienced mining contractors with
Macarthur (the Owner) maintaining orebody definition, quality
control and medium to long term mine planning functions and
management. The mining services include:
- Supply of personnel, equipment and mining infrastructure
required for the mining services excluding diesel fuel which is to
be supplied by the Owner.
- Mobilisation of buildings, equipment, and personnel.
- Clearing and stripping of suitable material from all disturbed
areas into discrete stockpiles.
- Construction of haul roads and light vehicle service roads in
the mine area and ongoing maintenance of haulroads.
- Construction of the Run-of-Mine (ROM) pad and skyway using bulk
waste.
- Grade control drilling.
- Drilling and blasting of ore and waste on 10 m benches.
- Load and Haul utilising 350-400 t class excavators and 180 t
class haul trucks mining on 5 m high
flitches.
- Hauling waste to external waste dumps.
- Hauling ore to the ROM pad where it will be direct fed to the
crusher ore placed onto a finger from skyway of stockpile adjacent
to the ROM pad.
- Rehandle of ore from ROM fingers or adjacent stockpiles.
- Ongoing pit dewatering from in-pit sumps.
- Rehabilitation of waste dumps and roads.
Pit Optimisation
The open pit optimisation process undertaken for the study has
the following key assumptions on the constraints and parameters
utilised:
- Only material classified as Measured and Indicated in the
Mineral Resource model were considered as potential ore during the
optimisation process.
- Mining dilution (averaging 2.0%) and mining recovery (averaging
97.5%) were modelled in the blockmodel.
- Waste mining costs were applied in the mining model based on
unit rates averaging A$2.54/dmt.
- A net concentrate product price of A$145.50 (after deducting 5% government
royalty).
- Ore processing rate of 9.68 Mt/year at a cost of A$13.45/dmt.
- Ore handling costs of A$2.99/dmt
were added for additional ore mining cost, grade control, ore feed
and reclaim from stockpile using Contractor unit rates.
- Annual fixed mining overheads for the Owners team were applied
as a unit rate of A$1.26/t to the ore
tonnes processed.
- Logistics costs of A$29.64/dmt
for road, rail and port charges were supplied by MIO.
- Overall pit slope angles of 27-33o in oxide and
27-41o in Fresh rock were based on geotechnical
recommendations by Pells, Sullivan & Meynink.
- Shell 20 with a revenue factor of 0.88 and a mine life of 20
years was selected as the basis for design. This shell captured 99%
of the value within a pit containing 93% of the ore and 89% of the
waste (when compared to the revenue factor 1.0 shell).
Mine Design
The design process provides a practical solution to the Whittle
shells by adding an arrangement of benches, berms, roads and ramp
systems. Dual lane ramps of 29 m and 10% gradient were
designed to accommodate Caterpillar 798D trucks.
The final pit design comprises two separate pits with a total of
seven internal stages. An overview of the final pit showing
internal stages is presented in Figure 3.
Moonshine North pit is approximately 1,450 m long, 500 m
wide and 225 m deep and Moonshine is
approximately 3.7 km long, 700 m wide
and 250 m deep. Each stage has a
separate ramp system that exits on the west side to provide short
hauls to waste dumps and ROM pad. The design process captured 0.9 %
additional ore and added 6.6% additional waste than defined by the
Whittle shell.
The final pits contain a total of 236.6 Mt at an average grade
of 28.2% Fe and 31.3% DTR reported above a cut-off grade of 15%
DTR. The total tonnage to be mined is estimated at 861.5 Mt at a
strip ratio of 2.6:1. The Moonshine pits contains 85% of the
magnetite ore with a lower strip ratio at 2.4:1 compared to the
smaller Moonshine North pit which has a strip ratio of 3.8:1. The
inventory by stage is presented in Table 3.
Mineral Reserves represent 87% of the Measured and Indicated
mineral resources. The production target of the Feasibility Study
is underpinned by 22% of Proven and 78% of Probable Mineral
Reserves. No inferred resources have been incorporated into the
Mineral Reserve or production target.
Table 3. Moonshine and Moonshine North Pit Inventories
reported by stage
Stage
|
Ore
|
Grades
|
Waste
|
Total
|
S/R
|
Mt
|
Fe %
|
SiO2
%
|
Al2O3 %
|
P %
|
S %
|
LOI %
|
DTR %
|
Mt
|
Mt
|
W:O
|
1
|
22.4
|
28.3
|
50.5
|
1.5
|
0.05
|
1.2
|
1.2
|
31.2
|
53.8
|
76.2
|
2.4
|
3
|
22.2
|
27.8
|
51.6
|
1.2
|
0.05
|
0.9
|
1.4
|
31.2
|
65.3
|
87.5
|
2.9
|
5
|
69.9
|
27.3
|
51.9
|
1.3
|
0.05
|
1.0
|
1.4
|
30.7
|
154.0
|
223.8
|
2.2
|
6
|
55.9
|
27.4
|
52.1
|
1.3
|
0.05
|
0.9
|
1.4
|
31.1
|
135.3
|
191.3
|
2.4
|
7
|
30.2
|
26.7
|
52.7
|
1.8
|
0.04
|
1.1
|
1.7
|
28.5
|
79.1
|
109.2
|
2.6
|
Moonshine
|
200.6
|
27.4
|
51.9
|
1.4
|
0.05
|
1.0
|
1.4
|
30.6
|
487.5
|
688.0
|
2.4
|
2
|
6.4
|
31.8
|
43.8
|
1.3
|
0.05
|
1.3
|
3.0
|
35.0
|
52.1
|
58.5
|
8.2
|
4
|
29.6
|
33.1
|
39.3
|
1.8
|
0.06
|
1.5
|
3.7
|
35.1
|
85.4
|
115.0
|
2.9
|
Moonshine
Nth
|
36.0
|
32.9
|
40.1
|
1.7
|
0.05
|
1.4
|
3.5
|
35.1
|
137.5
|
173.5
|
3.8
|
TOTAL
|
236.6
|
28.2
|
50.1
|
1.4
|
0.05
|
1.1
|
1.8
|
31.3
|
624.9
|
861.5
|
2.6
|
The blending strategy to manage silica levels reporting through
to the concentrate requires stockpiling on long-term stockpiles.
All material above a DTR cut-off of 29% was categorised as primary
ore feed. The material below 29% and greater than 15% DTR was split
into low and high silica categories as follows:
- Low Silica stockpile: SiO2 in concentrate < 6.7%; and
- High Silica stockpile: SiO2 in concentrate >= 6.7%
Primary feed ore will be hauled to the ROM pad and direct tipped
into one of two crusher pockets or placed on temporary finger
stockpiles from a skyway for later rehandle using a front-end
loader (FEL). Each of four fingers has been designed with a
capacity of 96,000 dt ore, sufficient for 14 days of feed. Based on
the disparity between the primary crusher (1,265 t/h) and the
excavator (2,080 t/h), the proportion of direct tip into the
primary crusher is estimated to be approximately 60%.
A total of 295 Mt of oxide overburden requires pre-stripping to
expose the ore within the Fresh BIF rock units. A further
328 Mt of fresh waste rock will be
mined over the life of the operation. The waste material will be
stored in three external waste dumps designed to a maximum height
of 60 m.
The overall strategy for haul road design was for a central road
linking the Moonshine and Moonshine North pits. The ROM pad was
located close to the centre of mass between the two pits, with the
waste dumps branched of the main haulage corridor providing
flexibility for dumping of waste material.
Prior to commencement of mining, the disturbed areas will be
cleared and the topsoil removed and stored in various stockpiles
around the site. These have been strategically located to minimise
haulage distances both during stripping and when reclaimed for
rehabilitation of the waste rock dumps. The topsoil locations are
shown in the general site layout plan, Figure 4.
Mine Production Schedule
Pre-production required a total of 28.1 Mt mined over an
11-month period comprising mostly oxide waste from Stage 1 with 164
Kt ore stockpiled for processing. The peak mining rate of
approximately 43 Mt/year utilising 3 excavators is reached in year
2 and maintained for 14 years. The mining rate is reduced to two
excavators for 7 years before reducing to a single excavator for
the final 5 years of operation. Figure 5 illustrates the oxide
pre-strip and fresh waste movements compared to the ore mined to
the ROM pad for processing or to stockpile for blending.
The Contract mining operation will be conducted with two
12-hours shifts per day. Both Owners and Contractors management,
technical and support personnel will work a 10-hour day shift. All
personnel will be sourced from either Perth or Kalgoorlie on fly-in fly-out
basis.
The operation will require a total fleet of 42 mining units
comprised of three primary 350t excavators, eighteen 180t dump
trucks, five dozers, two graders, two water carts, five drills, a
wheel dozer, a small excavator for ancillary work, two large
Front-end loaders, 2 trucks for rehandle and a single RC rig.
Manning levels will vary over the life of mine peaking at 307
personnel, including 38 Owners staff and 13 Contractor staff.
8. Mineral Processing and
Metallurgical Testing
A metallurgical drilling programme collected HQ sized core and
split the core for assays and Davis Tube testwork. Half core
was available for testing. As core was limited, sample
selection focussed on maximising the inclusion of mineralised ore,
whilst also including diluting intervals not rejectable by
selective mining. The interval considered was a half bench
height of six metres.
The composite details are provided in Table 4.
Table 4. Testwork composite details
Prospect
|
Hole
Identification
|
Core Selected at
BV
|
Sample Mass
(kg)
|
|
|
Start
|
End
|
m
|
|
Moonshine
|
LGDD_006
|
144.0
|
265.0
|
121.0
|
965
|
Moonshine
|
LGDD_066
|
83.7
|
165.3
|
81.6
|
407
|
Moonshine
|
LGDD_067
|
69.0
|
135.6
|
66.6
|
332
|
Moonshine
|
LGDD_068
|
83.0
|
193.5
|
110.5
|
551
|
Moonshine
|
LGDD_069
|
88.0
|
115.0
|
27.0
|
135
|
Moonshine
|
LGDD_070
|
88.0
|
132.8
|
44.8
|
223
|
Moonshine
|
LGDD_070
|
143.0
|
152.4
|
9.3
|
47
|
Moonshine
|
LGDD_070
|
166.0
|
173.5
|
7.5
|
37
|
Moonshine
|
LGDD_072
|
56.3
|
117.2
|
61.0
|
304
|
Moonshine
|
LGDD_073
|
110.4
|
140.9
|
30.6
|
152
|
Moonshine
|
LGDD_073
|
200.0
|
269.7
|
69.7
|
347
|
Moonshine
|
LGDD_023
|
101.1
|
198.7
|
97.6
|
973
|
Moonshine
Total
|
630
|
4473
|
|
|
|
|
|
|
Moonshine
North
|
LGDD_071
|
81.8
|
162.0
|
80.2
|
400
|
Moonshine
North
|
LGDD_074
|
47.1
|
71.0
|
23.9
|
119
|
Moonshine
North
|
LGDD_074
|
80.7
|
98.9
|
18.2
|
91
|
Moonshine
North Total
|
122
|
610
|
The magnetite testwork core drillhole locations are shown in
Figure 6.
The testwork was performed at the Bureau Veritas Laboratory (BV)
in Canning Vale, Western
Australia, an ISO9001 certified Laboratory.
There were two test plans developed, one for magnetic separation
and one for high pressure grinding rolls (HPGR) testwork. The test
plans are described in full in the Feasibility Study Technical
Report.
Head Assays
The composite head assays for Moonshine and Moonshine North are
presented in Table 5 and a summary of the test work is presented in
Table 6.
Table 5. Composite head assays
Composite
|
Fe
|
SiO2
|
Al2O3
|
P
|
S
|
LOI-1000
|
|
%
|
%
|
%
|
%
|
%
|
%
|
Moonshine
Actual
|
30.7
|
50.3
|
0.37
|
0.04
|
0.56
|
-0.12
|
Moonshine
Expected
|
30.1
|
|
|
|
|
|
Moonshine North
Actual
|
32.8
|
47.4
|
1.03
|
0.05
|
1.21
|
0.68
|
Moonshine North
Expected
|
32.7
|
|
|
|
|
|
Note: Hole 23 assays
not included in Moonshine calculations, as they were
unavailable.
|
Table 6. Test work summary
Testwork
|
Unit
|
Moonshine
|
Moonshine
North
|
Head
Assays
|
|
|
|
Assay Fe
Grade
|
%
|
30.7
|
32.8
|
SiO2 Grade
|
%
|
50.3
|
47.4
|
Al2O3 Grade
|
%
|
0.37
|
1.03
|
P Grade
|
%
|
0.04
|
0.05
|
S Grade
|
%
|
0.56
|
1.21
|
LOI Grade
|
%
|
-0.12
|
0.68
|
|
|
|
|
In Situ
SG
|
|
3.46
|
3.46
|
Concentrate BD
Unconsolidated
|
t/m3
|
1.88
|
1.95
|
Concentrate BD
Consolidated
|
t/m3
|
2.39
|
2.48
|
Abrasion
Index
|
|
0.58
|
0.53
|
BWI @ 75 µm
|
kWh/t
|
13.5
|
14.9
|
BWI @ 125 µm
|
kWh/t
|
13.5
|
14.9
|
SMC A*b
|
|
37.6
|
38.7
|
DTR @ 38 µm Fe
Grade
|
%
|
65.0
|
65.7
|
SiO2
Grade
|
%
|
12.7
|
8.5
|
Mass
recovery
|
%
|
40.9
|
43.7
|
|
|
|
|
HPGR
|
|
|
|
Press Force
|
N/mm2
|
4.1
|
|
Total
Throughput
|
t/h
|
38.6
|
|
-2.8 mm in centre
sample
|
%
|
51.4
|
|
-2.8 mm
generated
|
dtph
|
19.8
|
|
Specific
throughput
|
(t/h)/(m³/s)
|
259.3
|
|
Specific power
input
|
kWh/t
|
2.1
|
|
Predicted recirculating
load
|
%
|
116
|
|
Predicted power input
(of product)
|
kWh/t
|
4.54
|
|
|
|
|
|
Magnetic
Separation
|
|
|
|
Coarse Cobbing at -6
mm
|
|
|
|
Mass
Recovery
|
%
|
83.9
|
74.8
|
Fe Grade
|
%
|
32.5
|
38.6
|
SiO2
Grade
|
%
|
45.9
|
41.3
|
S Grade
|
%
|
0.36
|
1.08
|
|
|
|
|
BBWi Of CC Product @
125 µm
|
kWh/t
|
12.8
|
13.3
|
|
|
|
|
Single Stage LIMS @
212 µm
|
|
|
|
Mass
Recovery
|
%
|
66.5
|
57.6
|
Fe Grade
|
%
|
42.5
|
46.6
|
SiO2
Grade
|
%
|
37.0
|
31.5
|
Al2O3 Grade
|
%
|
0.14
|
0.20
|
P Grade
|
%
|
0.043
|
0.049
|
S Grade
|
%
|
0.52
|
0.81
|
|
|
|
|
2 stage LIMS @ 106
µm
|
|
|
|
Mass
Recovery
|
%
|
51.8
|
45.8
|
Fe Grade
|
%
|
52.3
|
55.6
|
SiO2
Grade
|
%
|
24.7
|
20.0
|
Al2O3 Grade
|
%
|
0.10
|
0.16
|
P Grade
|
%
|
0.030
|
0.036
|
S Grade
|
%
|
0.22
|
0.69
|
|
|
|
|
2 stage LIMS @ 38
µm
|
|
|
|
Mass
Recovery
|
%
|
43.6
|
37.7
|
Fe Grade
|
%
|
61.3
|
64.3
|
SiO2
Grade
|
%
|
13.6
|
9.4
|
Al2O3 Grade
|
%
|
0.05
|
0.07
|
P Grade
|
%
|
0.020
|
0.022
|
S Grade
|
%
|
0.19
|
0.60
|
|
|
|
|
Reverse
Flotation
|
|
|
|
Mass
Recovery
|
%
|
35.3
|
32.3
|
Fe Grade
|
%
|
68.3
|
68.2
|
SiO2
Grade
|
%
|
4.2
|
3.9
|
Al2O3 Grade
|
%
|
0.04
|
0.07
|
P Grade
|
%
|
0.018
|
0.019
|
S Grade
|
%
|
0.19
|
0.54
|
|
|
|
|
Tailings
Thickening
|
|
|
|
Solids
Loading
|
t/hr m2
|
1.5
|
1.5
|
Flocculant
dosage
|
gpt
|
20
|
10
|
Flocculant
|
|
Magnafloc
155
|
Magnafloc
155
|
Overflow
Clarity
|
mg/L
|
140
|
130
|
Underflow
density
|
% solids w/w
|
63
|
64
|
Diameter @ 691
dtph
|
m
|
25
|
25
|
|
|
|
|
Tailings
Filtration
|
|
|
|
Pressure
Filter
|
|
|
|
Filtration
Rate
|
kgDS/m2 h
|
305
|
358
|
Cake
moisture
|
% solids w/w
|
11.4
|
11.8
|
Filtrate
clarity
|
ppm
|
280
|
110
|
|
|
|
|
Vacuum
Filter
|
|
|
|
Filtration
Rate
|
kgDS/m2 h
|
394
|
746
|
Cake
moisture
|
% solids w/w
|
16.1
|
17.0
|
A discussion of the results alongside the resource model, led to
the project product being defined as below. If this
specification is found to be unsuitable, due to the high sulphur
content, further work will be needed to address the issue.
Table 7. Project product specification
Fe
%
|
Al2O3 %
|
SiO2 %
|
P
%
|
LOI
%
|
S
%
|
66.1
|
0.10
|
4.9
|
0.02
|
-2.7
|
0.6
|
9. Recovery Methods
In order to produce 3.0 Mtpa (dry basis) of concentrate,
assuming a weight recovery of 31%, 10 Mtpa of feed to the
process would be required. Two stages of conventional
crushing would crush the ore to a size suitable for feed to a
High-Pressure Grinding Rolls (HPGR) unit. The fine ore
grinding section contains two streams in parallel each containing
two stages of mills, with Low Intensity Magnetic Separation (LIMS)
units after each stage. This is followed by reverse flotation
and a final LIMS stage. The final concentrate moisture is
reduced by pressure filtration allowing stockpiling and transport
by truck.
A flowsheet for the operation is shown below.
10. Product Logistics
The logistics chain includes road haulage along a private
haul road utilising triple road-trains with side tip trailers,
stockpiling at the rail siding, rail transport with rotary tippling
wagons to the Port of Esperance, unloading by a rail car dumper,
stockpiling in a covered shed, reclaim by FEL and loading onto
ships via the number 3 berth ship loader. The following section
describes the logistics path in more detail.
Road Haulage
The responsibility for transporting product from the mine
product stockpile to the rail siding will be contracted out to a
specialist long haul contractor with the benefits of offsetting
capital expenditure, better haulage efficiencies and reduced
operational costs. The services include all vehicles, plant,
equipment and offices necessary for the provision of the
services. The contractor will also have responsibility for
stockpile management and train loading at the rail siding.
Rail Loading
A dedicated rail loop and product loading facility is planned
south of the Project to manage the transfer of product from road
transport to rail transport. An overview of the loop is shown
in Figure 8. The proposed 4.6 km rail loop ties into the Eastern
Goldfields Railway (EGR) at the 541 km chainage mark on the main
line.
Train loading will be conducted by two front end loaders loading
at a rate of approximately 2000 tph.
Rail Logistics
The rail line from the rail siding to Esperance is approximately
488 km of standard gauge rail suitable for bulk ore wagon
transport. This rail is managed by Arc Infrastructure (Arc) under a
lease agreement with the Western Australia Government. Arc
Infrastructure is owned by global asset management company,
Brookfield Infrastructure Partners and operates the rail under an
open access regime.
Indicative pricing for rail access has been provided by Arc
inclusive of capital upgrades. Should capacity become
available due to a decrease in rail paths by other operators,
updated pricing will be obtained that should deliver a reduction in
rail tariffs.
Proposals were sought from above rail operators to transport the
magnetite concentrate from the rail loop to the car dumper at the
Esperance port.
The preferred solution for the Project is a "full service"
arrangement. Under this arrangement the rail operator will be
responsible for providing the rail consists (providing the
locomotives and procurement of the wagons), rail operations and
rail maintenance (inclusive of storing spare wagons). To meet
the production rate for the project the rail operator will need to
provide a maximum of seven services a week based on a train
configuration of three locomotives and 126 wagons (9,387 T
payload).
Port
The preferred port, with a direct connection to the existing
Eastern Goldfields Railway, is the Port of Esperance operated by
Southern Ports Authority (SPA) (Figure 9).
Berth 3 is currently utilised for all iron ore shipments.
Existing iron ore export capacity through the Port of Esperance is
11.8 Mtpa, with export in the 2020/2021 financial year around 10
Mtpa. Berth 3 is capable of handling Cape class vessels up to
200,000 dwt, plus fully loaded Panamax class vessels up to 75,000
dwt. The design depth of Berths 1 and 2 is 14.6 m, Berth 3 and the inner channel are
19.1 m, the middle channel is
19.5 m and the outer channel is
19.9 m.
To facilitate export from the Port of Esperance, new storage
infrastructure is required to store the magnetite concentrate.
Existing rail unloading facilities, expected to have adequate
capacity, will be utilised to unload rotary car wagons and direct
product to the storage shed. Reclaim of material from the storage
shed will be managed by SPA contractors with ship loading via the
existing outload circuit and Berth 3 ship loader.
The Feasibility Study also considered an alternate case should
rail unloading capacity be unavailable. Under this scenario a new
rotary car dumper would be constructed at the port in addition to a
rail loop to allow a full consist to enter the port. Engineering
studies were completed and costs developed for the development.
However, given recent reductions in iron ore throughput at the
port, the Company considers sufficient capacity is likely to exist
and therefore, the base case assumes access to existing facilities.
The development scenario is presented in detail in the Feasibility
Study report.
Berths (Red
Numbers)
|
Storage Facilities
(Yellow Numbers)
|
Berth No. 1 –
Grains
Berth No. 2 –
Mineral Concentrate, Fertiliser, Fuel
Berth No. 3 –
Iron Ore
|
Shed 1 - Iron
Ore
Shed 2 - Iron
Ore
Shed 6 - Mineral
Concentrate
Shed 7 - Mineral
Concentrate
Shed 5 - Mineral
Concentrate
CBH
Operations
Summit
Fertilisers
Gas Fired Power
Station
Shed 3 - Iron
Ore
Shed 4 - Iron
Ore
Shed 10 -
Sulphur
Container Storage
Area
|
11. Non-Process
Infrastructure
Power
40 MW of power supply will be required for the Project inclusive
of the magnetite process plant and supporting non-process
infrastructure.
Enquiries were made to vendors to determine the cost of power,
optimal level of renewable penetration and the preferred
contracting strategy. The recommended solution was a BOO
contracting strategy with installed capacity of 48 MW (24 x 2 MW –
including redundancy) of natural gas reciprocating engines, 40 MW
Battery Energy Storage System (BESS) and 60 MW of solar panels
resulting in a renewable penetration of 33%. The location of
the solar farm in relation to the plant is shown in Figure 10.
Water Supply
The total annual water requirement for the Project is estimated
to be 4 Gl, supporting a mineral processing facility operating at a
nominal 3.0 Mtpa run rate along with all associated non-process
infrastructure (excluding the port) and dust suppression.
To develop an understanding of both the hydrogeology and water
quality within the area, a specialist hydrogeological consultant,
Rockwater was engaged to undertake an initial desktop
assessment. This was followed by an airborne electromagnetic
geophysical survey to further assess groundwater availability and
quality within the identified paleodrainage systems adjacent to the
Project.
The Rockwater studies concluded that, subject to completing a
comprehensive drilling and testing program, water supplies for the
Project should be available from the paleodrainage systems in the
Project area.
A bore field will be constructed to source water to supply the
Project's construction and subsequent process and potable water
requirements. Project estimates indicate 26 fully equipped
bores will be required to meet the Project water demand of 466
kL/h, based on nominal flow rates of 5 L/sec.
Accommodation
Due to the location of the Lake Giles Project, accommodation is
required to support the construction and operation of the mine.
It is estimated that a 720-room camp would be the peak size
required to support both the construction and operation of the
Project. Initially, the camp would accommodate the mining
contractor for pre-strip operations and the mine construction
contractors for a period of approximately one year.
Based on availability at the time of construction of the
village, it is envisaged that 280 rooms will be leased for the
duration of the construction with the remaining 440 rooms owned by
Macarthur.
Airport
With most of the workforce for construction and operations
expected to be sourced from Perth
(only a small percentage of the workforce is expected to commute
from Kalgoorlie) it is proposed to construct an airport to reduce
the commute times between the site and the closest public airport
(Kalgoorlie-Boulder Airport).
The proposed airport will be located approximately 2km south of
the camp and was chosen as the preferred site due to geotechnical
and hydrological conditions, topography, proximity to the camp /
mine (Figure 12).
12. Tailings Storage
Facility
The current development proposal for the Project is for open cut
mining of the Moonshine and Moonshine North deposits at the rate of
9.68 Mtpa, yielding 3 Mtpa (dry tonnes; dMtpa) of magnetite ore
over a period of 25 years. Of the 6.68 Mtpa of waste
material, a total of 1.18 Mtpa will report as dry tailings from the
low intensity magnetic separators (LIMS) process to be trucked to
the mine waste stockpiles and 5.5 dMtpa will be report as wet
slurry tailings pumped to the tailings storage facility
(TSF). Therefore, a total of 137.5 Mt of tailings (dry) will
need to be stored at the tailings storage facility during the mines
25-year life.
The starter embankment will have sufficient capacity to store
tailings until the third year of mining operations at such stage
the embankment will need to be raised 5
m to an elevation of 452 m
AHD. In the eighth year of operations the embankment will be
raised to an elevation of 457m AHD
and the final raise required for the life of the mine will be
required in the fifteenth year to an elevation of 462 m AHD.
The location of the TSF in relation to the mine is shown in
Figure 13.
13. Marketing and Pricing
The forward iron ore price adopted for the Lake Giles Iron
Project in this Report is based on the Company's assessment of
published consensus pricing, forecasts derived directly from steel
mills, various analyst reports and a comparison of historical
analyst forecasts against actual pricing over time.
A long-term CFR China sales price of USD131.40/dtmu for Macarthur's 66.1% Fe
concentrate product specification has been adopted, based on
forecast pricing for 62% Fe CFR China of USD99/dtmu through to 2050 with an adjustment for
grade and a magnetite premium. This is expected to result a
realised free on board (FOB) sales price of USD120.30/dtmu after shipping and marketing
costs.
14. Costs and Financial
Analysis
Operating Costs
Operating costs for mining have been developed from contractor
rates and in-house estimates. Processing and crushing costs were
provided by the Feasibility Study engineering consultant based on
feasibility level engineering studies for the processing plant and
supporting infrastructure. Product logistics encompassing road,
rail and port operations were sourced from budget quotations from
haulage operators and asset infrastructure owners. Site operating
costs total AUD 101.05/dmtu FOB (USD
71.74/dmtu) and summarised in Table 8. Operating costs
inclusive of WA State royalties total AUD109.56/dmtu FOB
(USD 77.79/dmtu) calculated against
the base case sales price of USD
131.40/t.
Table 8. Summary of operating cost ($/t concentrate)
Area
|
USD/dmt
|
AUD/dmt
|
Mining
|
26.08
|
36.73
|
Crushing &
Processing
|
22.41
|
31.56
|
Logistics
|
21.25
|
29.93
|
General &
Administration
|
2.00
|
2.82
|
Total operating
costs
|
71.74
|
101.05
|
Capital Costs
Capital cost estimates were completed at a Feasibility Study
level estimate with an expected accuracy range of between +/-10% to
+/-15% (AUSIMM Class 3), based on engineering to 25%
definition.
The Project capital cost is estimated at AUD801m (USD568.8m) with an additional AUD61.6m
(USD43.8m) in pre-production mining
costs. Capital breakdown is summarised in Table 9.
Table 9. Summary of direct & indirect capital
costs
Area
|
USDm
|
AUDm
|
DIRECTS
|
|
|
Facilities process
plant
|
11.6
|
16.4
|
Process
plant
|
227.6
|
320.5
|
Product transport
logistics
|
36.5
|
51.4
|
Port storage & ship
loading
|
24.2
|
34.0
|
Infrastructure &
headworks
|
72.0
|
101.3
|
General and
administration
|
1.3
|
1.8
|
Total direct
costs
|
373.1
|
525.5
|
INDIRECTS
|
|
|
Construction
Indirects
|
83.6
|
117.8
|
EPCM
|
52.2
|
73.5
|
Spares &
Commissioning
|
4.8
|
6.8
|
Freight
|
11.2
|
15.7
|
Contingency
|
43.9
|
61.9
|
Total indirect
costs
|
195.7
|
275.7
|
Total Direct &
Indirects
|
568.8
|
801.1
|
MINE
DEVELOPMENT
|
|
|
Capitalised
pre-strip
|
43.8
|
61.6
|
TOTAL PROJECT
CAPITAL
|
612.5
|
862.7
|
Project Economics
A full financial model has been developed for the
Feasibility Study inclusive of capital and operating costs,
taxes, and State royalties payable at 5% of FOB
sales price. The model uses constant (real, non-inflated) 2021 AU
dollars for operating and capital costs with shipping and iron ore
sales in US dollars with cash flows modelled in monthly periods.
The Project valuation was based on a discounted cashflow analysis.
The key assumptions and financial outcomes are summarised in Table
10.
At a 6% discount rate, the model reports a pre-tax NPV of
AUD816m (USD579.4m) with an IRR of
13%. After tax the NPV is AUD443m (USD314.5m) with an IRR of 10.1%.
Table 10. Summary of Project Economics
Production
|
|
|
Ore mined
|
236.6 Mt
|
|
Waste mined
|
624.9 Mt
|
|
Total mined
|
861.5 Mt
|
|
Strip ratio
|
2.64
|
|
Concentrate
produced
|
74 Mt
|
|
Concentrate iron
grade
|
66.1
|
|
Plant
recovery
|
31%
|
|
Financials
|
AUDm
|
USDm
|
Sales
revenue
|
12,614
|
8,956
|
Operating
Expenses
|
8,116
|
5,672
|
Initial Capital
Expenditure
|
|
|
Construction
capex
|
801.1
|
568.8
|
Mining overburden
pre-strip
|
61.6
|
43.8
|
Total initial
capital
|
862.7
|
612.5
|
Future Capital
Expenditure
|
|
|
Sustaining
capital
|
203
|
144.1
|
Deferred capital -
Tailings
|
39.8
|
28.3
|
Capitalised
non-operational waste mining
|
355.7
|
252.5
|
Total future
capital
|
598.0
|
424.6
|
Closure
Expenditure
|
|
|
Closure and
rehabilitation
|
58.2
|
41.3
|
Total Operating Cash
Flows
|
3,625
|
2574
|
Taxes &
Royalties
|
|
|
Tax paid
|
873
|
620
|
Royalties
|
631
|
435
|
Valuation
|
AUDm
|
USDm
|
NPV (6%)
Pre-tax
|
816
|
579
|
NPV (6%)
Post-tax
|
443
|
314
|
IRR Pre-tax
|
13.0%
|
-
|
IRR Post-tax
|
10.1%
|
-
|
15. Project Sensitivities
Sensitivity analysis was undertaken on key economic
inputs including:
- Iron ore price
- Capital costs
- Operating costs – individually and cumulative
- Discount rate
The Project NPV is most sensitive to iron ore pricing, followed
by the exchange rate and then operating costs. When viewing the
operating costs by main cost areas, NPV is most sensitive to mining
costs followed equally by processing and logistics. Project NPV is
least sensitive to capital cost.
The NPV sensitivities are shown in Tables 11 to 14 for +/- 10%
and 20% variations in the above key factors. Further sensitivity
analysis was performed for the base case scenario using a discount
rate between 6% and 10% (Table 15). All amounts are shown in
AU dollars.
Table 11. Pre-tax NPV sensitivity analysis on key economic
factors
|
AUD
|
Metric
|
-20%
|
-10%
|
Base
Case
|
10%
|
20%
|
Iron ore price
FOB
|
-370
|
223
|
816
|
1,409
|
2002
|
Capex
|
968
|
892
|
816
|
740
|
665
|
Opex
|
1568
|
1192
|
816
|
440
|
64
|
FX
|
2180
|
1422
|
816
|
320
|
-93
|
Table 12. Post-tax NPV sensitivity analysis on key economic
fact
|
AUD
|
Metric
|
-20%
|
-10%
|
Base
Case
|
10%
|
20%
|
Iron ore price
FOB
|
-398
|
25
|
443
|
861
|
1277
|
Capex
|
574
|
508
|
443
|
378
|
313
|
Opex
|
979
|
711
|
443
|
175
|
-94
|
FX
|
1403
|
870
|
443
|
94
|
-199
|
Table 13. Pre-tax NPV sensitivity analysis of operating cost
areas
|
AUD
|
Metric
|
-20%
|
-10%
|
Base
Case
|
10%
|
20%
|
Mining
|
1136
|
976
|
816
|
656
|
497
|
Processing
|
1028
|
922
|
816
|
710
|
604
|
Logistics
|
1018
|
917
|
816
|
715
|
615
|
Table 14. Pre-tax NPV sensitivity analysis of operating cost
areas
|
AUD
|
Metric
|
-20%
|
-10%
|
Base
Case
|
10%
|
20%
|
Mining
|
675
|
559
|
443
|
328
|
212
|
Processing
|
593
|
518
|
443
|
369
|
294
|
Logistics
|
585
|
514
|
443
|
372
|
302
|
Table 15. NPV sensitivity analysis against discount
rate
|
AUD
|
Discount
rate
|
Pre-Tax
|
Post-Tax
|
6%
|
816
|
443
|
7%
|
635
|
305
|
8%
|
482
|
189
|
9%
|
353
|
91
|
10%
|
243
|
8
|
16. Project
Funding
Subject to the qualifications below, the Company believes there
is a reasonable basis to assume the necessary funding for the
Project can be obtained and when required. The Company has been
able to raise funding to date for its exploration and development
in order to progress the Project.
The Company intends engaging with debt and equity capital
providers in parallel with release of the Feasibility Study and the
pursuit of project approvals. The positive outcomes delivered by
the Feasibility Study are expected to provide confidence to the
Board in the ability of the Company to fund the development of the
Lake Giles Iron Project via conventional mining project financing
methods, but the normal risks for the raising of capital will apply
to the Company, such as the state of equity capital and debt
markets, the status of approvals required to advance the Project
and the price of iron ore.
Whilst the Company believes that it has reasonable grounds based
upon the results of the Feasibility Study to secure the required
funding, there is no assurance that the project will proceed as
described or that funding will be available. It is possible
that Macarthur could pursue other 'value realisation' strategies
apart from conventional financing methods such as a partial sale or
joint venture of the project. If it does, then this could
reduce dilutionary impacts for existing shareholders and improve
the Company's overall prospects for project funding.
17. Regulatory Approvals,
Government and Stakeholder Engagement
An environmental impact assessment is required to obtain
environmental approval for development. The Company has commenced
the scoping process to identify the key environmental risks and
level of survey to be undertaken. The Company has mapped out an
approval pathway and schedule for the primary and secondary
approvals required and intends to commence desktop and baseline
surveys at the conclusion of the feasibility study. The Company has
previously gained EPA approval for its adjacent hematite project
and is not aware of any major environmental obstacles that would
prevent approval of the Project.
18. Next Steps
Following completion of the Feasibility Study, the Company now
intends to undertake further work in parallel with the advancement
of project approvals, to further optimise the project ahead of the
commencement of detailed front end engineering design work.
This
report has been authorised for release to the market
by the Board of Directors.
References TSXV
Announcements:
- TSXV Press Release filed 11 August
2020, titled "Moonshine Magnetite Resource Upgrade".
- TSXV Press Release filed 15 March
2022, titled "Maiden Mineral Reserve for Lake Giles
Magnetite Project totals 237 million tonnes supporting a 25-year
mine life".
SOURCE Macarthur Minerals Limited