Brockman says Marillana project has a potential $1bn NPV

16/04/2008 - 13:40

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Subiaco-based iron ore company, Brockman Resources Ltd has completed a positive scoping study which indicates its Marillana iron ore project, located north of Newman, has a potential A$1 billion net present value for a 10Mtpa project development.

Brockman says Marillana project has a potential $1bn NPV

Subiaco-based iron ore company, Brockman Resources Ltd has completed a positive scoping study which indicates its Marillana iron ore project, located north of Newman, has a potential A$1 billion net present value for a 10Mtpa project development.

Last month, Brockman announced a major upgrade in the JORC compliant indicated and inferred mineral resource estimate for the Marillana Project to 1.1 billion tonnes.

The Pre-Feasibility Study will commence during the second Quarter of 2008 and is scheduled to be completed next year.

The tenements surrounding the Marillana licence area are held by high-profile iron ore producers and developers Rio Tinto, BHP Billiton, Hancock Mining and Fortescue Metals Group.

 

The announcement is pasted below:

 

Iron ore company, Brockman Resources Ltd has added further weight to its development strategy for the Marillana Iron Ore Project, located 100km north of Newman in Western Australia, with the completion of a positive scoping study indicating a potential A$1 billion net present value for a 10Mtpa project development.

The Subiaco-based company said today that the Board had given approval to commence a pre-feasibility study during the June Quarter on the Marillana Project, with the study to be expanded to include the recent landmark indicated and inferred mineral resource upgrade to 1.1 billion tonnes of haematite mineralisation.

"The Scoping Study was commissioned last year based on our previously announced conceptual exploration target of 100 million tonnes of mineralisation to assess development options for the project and help guide our ongoing exploration activities," commented Brockman's Managing Director, Mr Wayne Richards.

"The Scoping Study therefore represents a conceptual development scenario based on a 10Mtpa iron ore project," he continued. "Importantly, it confirms that this base case development is robust, with strong forecast returns."

The Scoping Study indicates an NPV using a 12% discount rate (NPV12%) ranging from A$876 million to A$1.006 billion based on a 10Mtpa production rate, with capital costs forecast in the range of A$542M to A$755M depending on alternate logistical and ore transportation options.

The forecast Internal Rate of Return (IRR) ranges from 47% to 54%, with capital paybacks ranging from 2-3 years. The Study assumed a mine life of 11 years with all capital and operating costs modelled on the basis of mining and processing the Direct Shipping Ore (DSO) delineated at Marillana.

Mr Richards said the three principal development scenarios reviewed by the Scoping Study were utilisation of the BHP Billiton rail system, accompanied by full funding of a car dumper (i.e. unloader) at Port Hedland, utilisation of the FMG rail system with the full capital cost of a rail spur from Marillana to the new Cloud Break operations, and utilisation of the FMG system with the rail spur captured as an operating cost.

"It should be remembered that we do not have any third party access agreements in place at his stage, but we are in discussions with third parties in relation to these access agreements," Mr Richards said.

"The capital cost estimates include allowances for a 10Mtpa processing plant, associated minesite infrastructure and ore transport infrastructure, depending on the scenario."

"Price forecasts and exchange rates were based on forecasts provided by CRU Financial Analysis."

"The Study also considered three short-term start-up operating scenarios of 2-5Mtpa, which were considered and modelled to capitalise on the potential early development of the Marillana Project and the ability to establish early cash flow and operating performance," he added.


Mr Richards said it was important to note that the recently announced detrital resources were not included in the Scoping Study.

"We would anticipate that this would substantially improve the value and extend the mine life of the Project," he added.

Last month, Brockman announced a major upgrade in the JORC Compliant Indicated and Inferred Mineral Resource estimate for the Marillana Project to 1.1 billion tonnes.

The expanded resource encompasses both Channel Iron Deposits (CID's) with grades ranging from 55-60% Fe (55% Fe cut-off) and detrital ore with grades ranging from 40-62% Fe.

"The Pre-Feasibility Study will incorporate these expanded tonnages, underpinned by the strong foundations and confidence we have in the Marillana Project as a result of this Scoping Study," Mr Richards said.

"We are confident that the Project has the potential to underpin a world-class iron ore business and we intend to fast-track the development process in order to take advantage of current strong market conditions."

The Company will continue to carry out detailed RC, Caldweld and Sonic Core drilling throughout the year to better understand the mineralogy and metallurgical performance of both the CID and detrital mineralisation at Marillana.

The Pre-Feasibility Study will commence during the second Quarter of 2008 and is scheduled to be completed next year.

The Marillana Project is located 100km north of Newman between the Hamersley Ranges and Fortescue River Valley in Western Australia's world-class Pilbara iron ore region.

The tenements surrounding the Marillana licence area, E 47/1408, are held by high-profile iron ore producers and developers Rio Tinto, BHP Billiton, Hancock Mining and Fortescue Metals Group.

 

 

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