Subiaco-based Brockman Resources Ltd is targeting first ore production in late 2009 as it embarks on a hefty capital raising to accelerate development of its flagship Marillana iron ore project.
Subiaco-based Brockman Resources Ltd is targeting first ore production in late 2009 as it embarks on a hefty capital raising to accelerate development of its flagship Marillana iron ore project.
The company said it plans to raise $112.5 million through the issue of 45 million ordinary shares at $2.50 per share to major international and domestic institutions and sophisticated investors. The Lead Manager to the issue is Patersons Securities Limited.
The funds raised will be used to accelerate the development of Brockman's flagship Marillana Iron Ore Project, to achieve first ore production under a planned 2Mtpa (Mtpa - million tonnes per annum) license planned for late 2009. Marillana is located 100km north of Newman in Western Australia, and is well supported by existing road, rail and port infrastructure. The funds will also be utilised to develop exploration programs for several of the other 100%-owned tenements within the Company's portfolio.
The capital raising marks a very significant milestone in Brockman's development as a new Australian iron ore producer in the Pilbara region. Specifically, the funds raised will be used to:
- Develop the Marillana Project to achieve first ore production at a nominal rate of 2Mtpa by late 2009. The funds will be utilised to develop mine, rail and transport infrastructure to support initial production and the early export of iron ore.
- Fast-track a Pre-Feasibility Study for a 10 - 25Mtpa Project at Marillana, following the release of the recently completed Scoping Study and upgraded JORC Code compliant resource estimate of 1.1 billion tonnes of hematite mineralisation.
- Complete reconnaissance and metallurgical testwork drilling programs at the Marillana Project to upgrade the current JORC Code compliant Detrital and Direct Shipping Ore (DSO) resource estimates of 1,062 million and 56 million tonnes respectively. The post beneficiation grade of the detrital ore will be 59.5 - 59.8% Fe, while the DSO (predominantly CID - Channel Iron Deposit) is currently 57.5% Fe (calcined Fe grade of 62.6% Fe).
- Commence exploration activities across Brockman's additional iron ore tenements, including Duck Creek, Mt Florence, Ophthalmia and West Hamersley in order to increase its inventory of CID, Marra Mamba, Detrital and Direct Shipping Ore.
The share placement will be made in two tranches, with the first allotment of 12.4 million shares expected to be placed by Thursday 12 June, under the Company's 15% placement capacity. The second allotment of 32.6 million shares is subject to shareholder approval, with a General Meeting of Shareholders expected to be held on Monday 07 July, 2008.
Brockman Resources' Managing Director, Mr Wayne Richards, said he was very pleased by the strong response to the capital raising, which will introduce a number of leading Australian and international institutions to the Company's share register and complete the funding required by the Company to fast-track its production plans to take advantage of strong iron ore prices.
"The outstanding response we have received to this capital raising is a reflection of the high quality of the Marillana Project - both in terms of the Project's existing resource base and exploration upside - and the continuing strong outlook for iron ore underpinned by demand from China and other developing nations," Mr Richards commented.
In March 2008, Brockman announced a major upgrade in the JORC Code Compliant resource estimate for the Marillana Project to 1.1 billion tonnes. The expanded resource estimate 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.
Brockman completed a positive Scoping Study for the Marillana Project in April which indicated a potential $1 billion Net Present Value (NPV) for a 10Mtpa project development. The Scoping Study was commissioned prior to the recent resource upgrade, and was based on the previous conceptual exploration target of 100 million tonnes of Direct Shipping Ore.
"The new Feasibility Study currently underway will incorporate the expanded tonnages from our recent resource upgrade, which are expected to improve the overall economics and scope of the Project," Mr Richards commented.
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 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.
