Aspiring iron ore producer, CZR Resources has pegged and lodged a mining lease application taking a key step in bringing the 89.1-million-tonne Robe Mesa iron ore deposits into production in the Pilbara. Definitive feasibility study works are accelerating following the recent release of a pre-feasibility study which demonstrated the economic potential of the project.
Western Australia’s Pilbara needs little introduction as an iron ore producing region with mining giants BHP, Rio Tinto and Fortescue Metals all key players in the global supply chain of iron ore sourced from the district. WA is the largest supplier of iron ore in the world accounting for some 39 per cent of global supply in 2018.
CZR is the latest participant looking to make its mark in the iron ore rich region as it looks to bring the Robe Mesa deposits into production. The company has taken a key step in its journey by pegging and lodging an application to convert a 5.8 square kilometre section of the Yarraloola exploration license into a mining lease.
Yarraloola lies approximately 400km south-west of Port Hedland and is wedged between to the Mesa-A and Mesa-J iron ore mines operated by Rio Tinto.
Following the release of a PFS for the project late last year which appears to show an economically robust mining operation, the application for a mining lease is one of numerous steps being undertaken as CZR moves forward with DFS works in preparation for production.
The PFS is based on mineral resource estimates for the Robe Mesa portion of the combined Robe Mesa and Robe East resource of 89.1 million tonnes at 53.7per cent iron from two sub-horizontal zones of mineralisation.
According to CZR, results from the PFS appear to show that the deposit has the potential to generate strong financial returns based on a 2 million tonne per annum direct shipping ore production over a 64-month period.
The higher-grade mineralisation made up of 24.7 million tonnes at 56 per cent iron, including the ore reserves at the project which total 8.2 million tonnes of ore at 56 per cent iron, formed the basis of the PFS estimates.
Using a benchmark iron ore price of US$90 per dry metric tonne and an Australian dollar exchange rate of US$70c, the PFS projects a payback period for the mining operation of just 19 months with cashflow of A$96.4m for the life of the mine. Pre-production capital costs of A$51.1m are estimated, with an average C1 cash operating cost of A$64.78 per dry metric tonne.
CZR has wasted little time in preparing the DFS for Robe Mesa after the release of the PFS in December last year.
Desktop studies of surface and ground-water components of the operation are scheduled for the current month, while heritage and flora and fauna studies are on the cards in preparation for reverse circulation drilling.
The company reports that is in advanced discussions with a range of consultants concerning the key roles of the DFS. Costings and scheduling are being presented to service providers for a vast array of activities including Native title engagement, heritage clearance, site access and drill-pad preparation, RC drilling, metallurgy, mine design, site engineering, haulage and port studies.
The DFS budget and timetable are also being finalised whilst CZR is also examining opportunities to reduce capital and operational costs.
For aspiring iron ore producers there is no better neighbourhood to be in than the Pilbara. With Robe Mesa already looking the goods, investors will be on alert as CZR continues to accelerate its journey towards becoming the next iron ore producer in the famed region.
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By Matt Birney
