Brockman Resources has estimated the infrastructure costs for its Marillana iron ore project in the Pilbara will be between $1.3 billion and $1.9 billion and it hopes to have the mine operating by 2014.
Brockman Resources has estimated the infrastructure costs for its Marillana iron ore project in the Pilbara will be between $1.3 billion and $1.9 billion and it hopes to have the mine operating by 2014.
Brockman has released its Definitive Feasibility Study on the Marillana project forecasting average production of 17 million dry tonnes per annum over a mine life of 25 years.
In a statement to the Australian Securities Exchange Brockman said construction at the site is due to start in November 2011.
The company hopes the first ore ship will depart in early 2014.
The DFS recommended two rail infrastructure options, a rail loop within the Marillana site and a rail spur from the site to an alternative rail head owned and operated by an existing mining company.
Brockman said building its own rail spur would add $474 million to the capital costs.
See company statement below:
Brockman Resources Limited (ASX: BRM - "Brockman" or "the Company") has taken a major step towards becoming a substantial iron ore producer in the Pilbara region of Western Australia, after delivering a positive Feasibility Study for its 100%-owned Marillana Iron Ore Project in Western Australia.
The thirteen month study lead by principal engineering group Ausenco Limited, incorporated a Definitive Feasibility Study ("DFS") on the Marillana mine and processing plant and confirmed that the Marillana Project is an economically robust, long-life iron ore project that will generate substantial returns for the Company and its shareholders - paving the way for the commencement of a Bankable Feasibility Study ("BFS") as the next stage of project development.
The Marillana DFS significantly enhances the key outcomes of the Pre-Feasibility Study ("PFS") completed in August 2009, confirming that the Project has the potential to underpin a world-scale iron ore business for Brockman, with forecast average production of 17 million dry tonnes per annum ("Mtpa") over a mine life of 25 years.
The Project is strategically located within the heart of the major iron ore mining region in Western Australia and is located close to established infrastructure including gazetted roads, port facilities and three current operating rail systems, with a potential fourth railway system to be developed - all within a 40km radius of the tenement.
Key Outcomes of the Marillana Definitive Feasibility Study
A 1.6 billion tonne Mineral resource was converted to an Ore Reserve totalling 1.05 billion tonnes.
An improved waste to ore stripping ratio of 0.85 (compared with 1.4 in the PFS) was confirmed following the development of the definitive mine plan and pit design and confirmation of the upgradability of the ore (at a 38% Fe head grade cut-off) to a marketable final product quality.
The Ore Reserve (post beneficiation) supports the production of over 419 million tonnes of final product at an average grade of 60.5% - 61.5% Fe, with impurity levels comparable with other Direct Shipping Ores exported from the Pilbara.
A 'Fines' only (-8mm) product will be produced.
Both the beneficiated Detrital Iron Deposit ("DID") ore and the Channel Iron Deposit ("CID") - Direct Shipping Ore will be blended to produce a single product at various times within the mine's life.
The life-of-mine average production rate for the Project will be 17Mtpa, but will peak to a maximum of 21Mtpa in various years of the mine plan.
Pre-production mine capital costs of A$1.27 billion (including EPCM, Owners costs and Contingency).
Financial modelling of the DFS and of the rail and port studies has projected:
A Rail spur option from Marillana is estimated to have a direct capital cost of up to A$0.47 billion. Modelling has considered capital recovery and ownership alternatives for the rail spur option, in the form of reduced operating tariffs.
Cash operating costs (before royalties) Free on Board Port Hedland of between A$35.6 - A$36.9 / tonne.
A NPV10% after tax real estimate range of A$2.3 - A$2.6 billion.
An ungeared Internal Rate of Return ("IRR") range estimated at 27.7% - 37.9%.
Life-of-mine revenue of greater than A$35.3 billion, utilising the long-term price and foreign exchange assumptions in the model
Forecast capital payback of less than four years.
The Marillana rail studies encompassed a range of ore transportation scenarios, based upon the future finalisation of the optimal rail solution/agreements for the Marillana Project.
The Port DFS, under the management of the North West Iron Ore Alliance ("NWIOA"), for the development of 50Mtpa of port capacity is currently being undertaken by Sinclair Knight Merz ("SKM") and Coffey Environmental, and is forecast to be completed in Q1 of CY 2011. A Final Investment Decision and financing package for the development is expected to be completed by late Q2 2011, which complements the forecast completion date for the Marillana BFS.
"The completion of the DFS for the Marillana Project represents a major milestone for Brockman, confirming that it is a world-scale project with the potential to generate strong operating margins, robust financial returns and significant value for Brockman shareholders," said Brockman's Managing Director, Mr Wayne Richards.
"With a pre-production mine capital investment cost of A$1.3 billion, it also represents a project of significance to Western Australia which will generate hundreds of long-term jobs, and contribute a projected A$1.75 billion in State royalties over its estimated initial 25-year mine life," he added.
"With the DFS now complete, the Board will move to undertake a detailed review of its outcomes with a view to securing the optimal rail access and infrastructure solution. This will enable progression into the BFS stage as the foundation for project financing and strategic partner discussions during the first half of calendar 2011."
"Subject to a positive BFS and Final Investment Decision, which are targeted for Q3 CY 2011, site construction is forecast for the forth Quarter of next year, culminating in mining commencing in 2013 and plant commissioning late in that year."
Mineral Resources and Ore Reserves
The Mineral Resources for the Marillana Iron Ore Project have been estimated by Golder Associates Pty Ltd ("Golder") to be in excess of 1.6 billion tonnes as reported to the ASX on 9 February 2010.