Fortescue Metals Group today signed a state agreement with the state government relating to its proposed iron ore mine in the Chichester Ranges.
Fortescue Metals Group today signed a state agreement with the state government relating to its proposed iron ore mine in the Chichester Ranges.
The signing of the Iron Ore (FMG Chichester Pty Ltd) Agreement triggers the Railway and Port (The Pilbara Infrastructure Pty Ltd) Agreement, which deals with the infrastructure aspects of FMG's iron ore project. The Railway and Port Agreement was signed and ratified by Parliament in 2004.
State Development Minister Alan Carpenter said the Agreement required the development of a comprehensive Community Development Plan (CDP) by FMG Chichester, subject to Ministerial approval, before the company could submit project proposals.
The CDP must outline FMG Chichester's commitments in relation to training and guaranteed employment for people living in the region; regional development and local procurement of goods and services; contribution to community services and facilities; and a regionally based workforce.
"The CDP is designed to give effect to the government's sustainability objectives by ensuring that development under the Agreement delivers benefits to the local communities close to the project," Mr Carpenter said.
He said the Agreement also included secondary processing obligations, standard for modern iron ore State Agreements, to promote industry diversity and add value to the State's mineral wealth.
"Secondary processing obligations require FMG Chichester to conduct ongoing investigations into the feasibility of further processing, and report on the outcome of those investigations," Mr Carpenter said.
"There is a 100 million tonne aggregate limit on the amount of iron ore which FMG Chichester can mine before its secondary processing obligations start to take effect."
The Agreement has a 45million tonne annual limit on the amount of iron ore, which can be produced and transported from the Company's mining leases.
Below is a FMG announcement on reserves:
Ore Reserve Statement - 1.07 Billion Tonnes
- 1.07 Billion Tonnes Probable Ore Reserve estimate for studies at Christmas Creek - 619 Million Tonnes and Cloud Break - 447 Million Tonnes.
- Study conversion rate of 77% from Resource to Reserve
- 359 Million Tonnes of high grade "direct ship ore" at average Fe of 60.4%.
- Infill drilling continuing at Christmas Creek and Cloud Break to reclassify inferred resources and enable ongoing Reserve studies.
Fortescue Metals Group Ltd ("Fortescue") is pleased to advise the results of its Ore Reserve Study
covering the Christmas Creek and Cloud Break deposits. The information has been prepared by
Snowden Mining Industry Consultants ("Snowden") and the Competent Person statement has been
compiled by Mr Jim Williams of Fortescue. This report supersedes that done by SRK Consultants which
was released on 31 October 2005 and covered only part of the Christmas Creek deposit.
This latest study was based on resource information from Snowden and previously advised to the ASX.
The total reserve study pool was 1.38 billion tonnes "Bt" of Indicated resource drawn from the 12
September 2005 Christmas Creek statement of 809 million tonnes "Mt" of Indicated resources and from
the 6 October 2005 Cloud Break statement of 572Mt of Indicated resources. The determination of a
Probable Ore Reserve estimate of 1.07Bt represents a conversion rate of 77%.
The Reserve estimate has been segregated into high grade ore at 359Mt (60.4% Fe average) and lower
grade ore at 707Mt (57.7% Fe average). The significant proportion of high grade material supports
Fortescue's plan of initially targeting direct ship ore sales. Going forward the Company fully expects there
will be further increases to the volume of high grade product as further reserve studies are completed
over 2006.
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In addition to the current contracted high grade sales of 25Mt per annum, Fortescue is developing strong
market interest for its lower grade material (ie. c.58% Fe). The attraction of this material is the Fe content
on a calcined "post sintering" basis whereby the relatively high LOI (average 7.8%) is burnt off which
provides for an upgrading of the Fe content.
The results of Fortescue's extensive beneficiation test program undertaken with Roche Mining MT on
Christmas Creek material, have been previously released to the market (refer release 15 June 2005).
The results show a clear ability to process the lower grade product to a target grade of 60% Fe. This
provides Fortescue with the knowledge that if required, it can successfully beneficiate the lower grade
material.
A more detailed overview of the latest Reserve Study is provided in the Fortescue report attached to this
announcement. The report contains commentary on the study model and methodology and has a table
which shows the chemical composition of the ore.
Fortescue is continuing its infill drilling program to further increase the quantity of Indicated tonnes which
can then be considered for further reserve studies. Of Fortescue's total resource estimate of 2.4Bt there
is 1Bt classified as an Inferred resource. Fortescue has also implemented a drill spacing grid pattern over
certain sections of its deposits to target the conversion of tonnes into a Measured classification which can
then be considered for Proved Resource estimate status.
