Unlisted public company Cashmere Iron has signed an agreement with Esperance Ports Sea and Land to expand the capacity of the town's multi-user port.
Unlisted public company Cashmere Iron has signed an agreement with Esperance Ports Sea and Land to expand the capacity of the town's multi-user port.
Cashmere, which has projects in the Mid-West and Yilgarn regions, has agreed to provide funding for the costs associated with the expansion of the port to 10 million tonnes per annum by the fourth quarter of 2012.
It will use an allocation of 5Mtpa of Direct Shipping Ore from its Cashmere Downs project.
Cashmere has also entered collaboration with Westnet Rail to review rail infrastructure in the region.
The negotiations will ensure that new capability of the port integrates seamlessly with the rail corridor.
Cashmere has established a predominantly JORC-compliant iron resource of more than 1 billion tonnes.
In a statement to the Australian Securities Exchange, Cashmere said that it had nearly completed its Hematite DSO program.
The results are due in December.
It is also currently finalising the Bankable Feasibility Study of the DSO component of the project.
See company statement below:
Cashmere Iron Ltd ("Cashmere" or "the Company"), an unlisted public company based in the Mid west region of Western Australia, remains on track for the commencement of a Direct Shippable Ore ("DSO") operation from its 100% owned Cashmere Downs Iron Project ("Cashmere Downs").
Cashmere has signed a Framework Agreement ("Agreement") with Esperance Ports Sea & Land ("EPSL") on 28 October 2010 that will see an expansion of the capacity at the multi-user port at Esperance by 10mpta from Q4 2012. A second stage port expansion of another 10 Mtpa has also been planned. Cashmere has agreed to underwrite the capital costs associated with the expansion and will use 5 Mtpa of the increased capacity in stage 1 and a further 5Mtpa in stage 2. There will be allocations for other iron ore miners and there has already been significant interest from members of the recently formed Yilgarn Iron Ore Alliance.
The Agreement followed a collaborative process between ESPL and miners who had expressed an interest in port development. Cashmere has been an integral stakeholder in the review consultation process and has committed substantial resources to the review, continuing analysis and implementation plans for the upgraded facility. The Framework Agreement provides that the multi-user facility will be implemented with EPSL in full control of all aspects relating to operations, maintenance and access allocation of the facility. Ministerial approval will be sought in the process. Regional miners will be consulted regarding their tonnage requirements, special handling needs and timing.
Cashmere has also entered collaboration with Westnet Rail to review rail infrastructure in the region to ensure that new capability of the port integrates seamlessly with the rail corridor. Cashmere is located approximately 180 kms from the Menzies railhead and can use the existing standard gauge Leonora-Kalgoorlie-Esperance line. The study identified cost effective upgrades can be implemented with the existing line to accommodate the increased tonnage. Cashmere intends to use road haulage initially to Menzies but has planned development of a rail line from its mine to Menzies. There are a number of projects in the same vicinity and Cashmere expects that a collaborative process will emerge.
The Cashmere project is one of the premier iron deposits in the region, with a JORC Code compliant iron resource of over 1 billion tonnes over 7.5kms of a total of 52kms of banded iron ridges. The JORC resource has 92% in the Measured and Indicated category and represents less than 15% of the total banded iron formations within Cashmere's tenement area. The depth used in the estimate was 250 mrl, which is a viable mining depth.
Preliminary metallurgical work has already shown that the asset is viable and capable of producing a commercial magnetite product with a Fe grade of 68% and SiO2 of < 4.5%. In addition, Cashmere has been investigating its JORC compliant 192 Mt of Hematite cap and representative bulk samples have shown that the sinter Hematite BFO grade material (mag-hematite) can be produced using a magnetic stream, with a 42% weight recovery, and concentrate grading at Fe 65% and Si02 < 4.5%. Compared to magnetite production, this Hematite stream should be significantly cheaper to establish and have lower operating costs.
Cashmere is also near completion of its Hematite DSO program, with the results due in December 2010.
Approvals for the project are advanced, with Level 2 second stage environmental studies completed, Native Title agreements in place, Heritage surveys completed and with granted Mining Leases. Cashmere has strong community and environmental values and plans to work closely with stakeholders.
Cashmere is currently finalising the Bankable Feasibility Study of the DSO component of its project, which it expects to have finalised in Q1 2011. A Prefeasibility study of Hematite cap material is also expected in Q1 2011. Cash flow from the initial DSO operation will be used to fund the Company's further exploration and production plans for its other materials.
"A key barrier to the development of a range of projects in Western Australia is access to infrastructure. The construction of the multi-user facility at Esperance and upgrading of the rail corridor will be of immense benefit to all resources companies operating in the region. As we are preparing for production, the establishment of a clear pathway to market is a major milestone for the Company. We are excited by our recent study results suggesting viability not only of the magnetite resource but also for the Hematite resource." said Dr Martin Chapman, Corporate Director of Cashmere Iron.
"Cashmere intends to use Esperance port initially for its DSO operations and remains committed to the development of the Oakajee Port. It is planned that Oakajee will be used for the shipments of our beneficiated Hematite and later magnetite product. Oakajee is pivotal development for Western Australia and will allow the Mid West region to become a major iron ore precinct. We applaud our Premier's commitment to driving the project forward. The new facility at Esperance will complement Oakajee, and allows this state have world class resource infrastructure system " stated Mr David Hendrie Chairman of Cashmere Iron.
