1bt of iron ore at Marillana: Brockman

Nedlands-based Brockman Resources says the maiden hematite iron ore reserve estimate for its Marillana project in the Pilbara is more than 1 billion tonnes.

In a statement to the Australian Securities Exchange, Brockman said it is the fourth largest hematite reserve in the Pilbara behind Rio Tinto, BHPB and Fortescue Metals Group.

Brockman hopes the project will produce 426 million tonnes of direct shipping hematite ore.

"The ore has the ability to generate revenue of greater than $50 billion," the Brockman statement said.

Brockman said most of the definitive feasibility study had been completed and the company was on-track to release the final results later this month.

See company statement below:

Brockman Resources Limited (ASX: BRM - ―Brockman‖ or ―the Company‖) is delighted to announce a maiden hematite Ore Reserve estimate of 1.05 billion tonnes for its flagship 100% owned Marillana Iron Ore Project ("Marillana Project") in the Pilbara region of Western Australia.

Definitive mining studies by Perth based Golder Associates as part of the Definitive Feasibility Study ("DFS") have demonstrated that the Marillana Project contains Proven and Probable detrital Ore Reserves within the optimal pit design in excess of one billion tonnes, as indicated in Table 1. Additionally the Marillana CID Ore Reserves within the pit design are estimated to be in excess of 48Mt, as shown in Table 2.

Based on extensive beneficiation testwork, the detrital Ore is expected to produce 378Mt of final product grading 60.5-61.5% Fe with impurity levels comparable with other West Australian direct shipping hematite ore ("DSO") iron ore producers. The CID Ore is a DSO product that will be blended with the beneficiated detrital product at a maximum 1 in 6 ratio for export as a single (Fines only) product. The Marillana Project will produce in excess of 426Mt of final DSO equivalent product. At current prices, this ore has the ability to generate revenues of greater than A$50 billion.

This represents by far the largest published hematite Ore Reserve position in the Pilbara outside the three major producers (BHPB, Rio and FMG). The detrital Ore is upgraded to a high quality, efficiently sintered product via simple beneficiation, which is supported by low-cost mining, low ore:waste stripping ratios, large continuous ore zones and simple processing. The simplicity of the Marillana Project means that the expected cost of mining and processing (final product loaded on trains) will be very compatible, if not lower than most of the newly commissioned mines in the Pilbara.

Background to the Resource Development
Preliminary mining technical studies commenced with Golder Associates during November and December of 2009. Initially these studies were centered on trade off and economic sensitivity investigations with respect to selective mining unit ("SMU"), mining methodology and mining equipment specification. Geotechnical studies in support of the DFS were also completed during December 2009 by Coffey Mining, and importantly for the project, have confirmed the free dig nature of the Marillana detrital ore deposit.

These initial technical studies were paramount to the development of key mine design parameters and coincided with the completion of the revised Marillana resource model, which together became the basis upon which the ensuing DFS pit design and optimisation exercises were conducted. Subsequently the definitive mining schedule was completed for the chosen pit shell and optimised for the purposes of the Marillana DFS, culminating in the definition of the Marillana Project ore reserve estimate.

Mine Design and Pit Optimisation
The Ore Reserves reported are within pit designs based on open pit optimisations carried out on Measured and Indicated Mineral Resources classifications only. The resource model used for the pit optimisations was prepared by Golder Associates in February 2010 and reported to the Australian Securities Exchange on 9 February 2010. The model was regularised to a parent block size of 20m by 20m by 6m (minimum mining bench height) reflecting the scale of mining to be employed. The pit optimisation took into account dilution and ore loss associated with the 6m minimum mining benches, setbacks along tenement boundaries and overall pit slope angles.

The pit optimisation was based on a detrital ore cut-off grade of 38% Fe and a CID cut-off grade of 52% Fe. An iron ore price of A$65/tonne free on board was utilised (based on US$0.8117/dmtu and an exchange rate of US$0.75). Sensitivity analysis demonstrated that the pit optimisation was extremely robust, with virtually no change in the optimum pit shell in reaction to 25% adverse movements in iron ore price, mining or processing costs.

In the pit optimisation, pisolite Mineral Resources was considered as waste, for the purpose of the maiden hematite Ore Reserve estimate. Further metallurgical testwork on this ore lithology is planned, including studies on blending with low alumina detritals. This has the potential to expand the Ore Reserve considerably, should the metallurgical testwork confirm its upgradability and favourable sintering performance.
With the exception of the pisolite ore and the Mineral Resources contained within the tenement setbacks, the pit design contains virtually the entire Measured and Indicated Mineral Resources identified at the Project. The northern pit wall is limited by the extent of Indicated Mineral Resources in this area (see Figures 1 and 2). However, the Marillana Project contains a further 201Mt of detrital mineralisation in the Inferred Mineral Resources category, almost all of which lies immediately north of the Indicated Mineral Resources. This mineralisation has not been taken into account during the Ore Reserve assessment, as under the JORC Code the Inferred Resources cannot be converted to Reserves. Based on previous experience at the Marillana Project, it is expected that infill drilling of this material will result in a potential upgrade of the Mineral Resources classification to Indicated or Measured. This could also lead to an increase to the total

Ore Reserves at the Marillana Project.
The final pit design used very conservative overall pit slope angles of 16-37 degrees and produced a waste to ore stripping ratio of only 0.87:1, which is almost half of the 1.4:1 stripping ratio used in the Pre-Feasibility Study ("PFS"). The Ore Reserve is contained within two broad, shallow pits having a combined strike length of over 14km. The ore zones are continuous over the length and width of the pits, allowing for simple, low cost and efficient mining.

The results confirmed the Marillana Project as having a mine life of approximately 25 years at production rates between 17Mtpa and 20Mtpa of final product with a specification that is comparable with DSO being mined from other major Pilbara iron ore operations.
Development of DFS Mine Planning and Scheduling
The completion of the DFS mine schedule has facilitated the final design and layout of the mine site including the locations and designs of ore, top soil and waste rock stockpiles and processing plant reject storage facilities and has also informed and substantiated the process plant design basis.

In conjunction with the mining equipment selection studies and finalisation of site layout drawings, the completion of the mine schedule has also brought about a convergence in mining strategy and methodology, which will harness a combination of traditional mobile mining fleet and semi mobile in-pit crushing and overland conveying techniques to provide an innovative and effective mining solution for the Marillana Project.

All aspects of the Marillana Project mine development have been subjected to a rigorous peer review by expert mining consultants Optiro Pty Ltd, who have been commissioned to oversee and adjudicate the mining contract tendering process for the Marillana Project. Discussions and negotiations have commenced with selected mining contractors for expressions of interest with respect to definition and scope of mining contract parameters.
Definitive Feasibility Study Update

The majority of work on the DFS has now been completed, with Brockman on-track to release the final results of the DFS this month.

Process design and engineering of the preferred process route have been completed and pricing of major equipment packages has been factored into the capital cost estimates. Financial modelling based on the DFS Capex and Opex estimates has commenced to determine the financial parameters of the optimal project delivery strategies.

The pit optimisation, open pit design and definitive mining schedule have now been optimised, as part of the development of this Ore Reserve statement.