New player stakes its Territory

With the major iron ore miners lifting production to cash in on continuing strong demand from China, the growing number of small emerging producers shows no signs of slowing down.

Perth-based newcomer Territory Iron Ltd is the latest to jump on the back of increased Chinese iron ore import predictions to announce an early 2007 production start for its Frances Creek project in the Northern Territory at between 1.5 and 2 million tonnes a year.

This follows a statement by Beijing-based China Metallurgical and Mining Association view that iron ore imports would jump more than 16 per cent, or 45 million tonnes, to 320mt this year.

And Macquarie Bank has estimated that China will account for 44 per cent of iron ore globally in 2006, up from 35 per cent in 2004.

Territory has an initial ore reserve at Frances Creek of 3.48mt grading a high 61 per cent iron from just five of its 55 known deposits. The reserve sits within an overall resource of 6.85mt grading 60.6 per cent iron, double that contained in the company’s February 2005 initial public offer document.

The company expects to complete a feasibility study by the end of February ahead of the decision to mine.

However, Territory managing director Doug Stewart told WA Business News pit optimisation and mine design work to date indicated the project’s viability, with production beginning early next year.

And Territory has a couple of nice value adds going for it.

The winners in the current iron ore game, particularly among the juniors, are those with infrastructure.

Frances Creek, last mined in 1974 before Cyclone Tracy hit it, is about 13 kilometres from the Adelaide-Darwin railway and 190 kilometres south of Darwin, where the Darwin Port Corp is building a new bulk loading facility to be ready about the time Territory goes into production. Negotiations with the port are continuing.

Another bonus is that Singapore-based, ASX-listed metals trader OM Holdings Ltd is a founding Territory shareholder, with a 25 per cent stake in the company.

OM is a major manganese trader and has a strong sales links into China, including a processing plant there.

It also has 75 per cent of the big Bootu Creek manganese project a few kilometres south down the Adelaide-Darwin railway line near Tennant Creek, which is expected to go into production at 550,000-600,000t/year within the next couple of months.

OM’s other Bootu Creek partners are BHP Billiton and Anglo American Corp, and it has an exclusive sales deal with Territory to sell all its Frances Creek iron ore.

Mr Stewart said the company would launch an aggressive exploration program on other deposits along its 35-kilometre belt of iron prospective host rocks, with a high probability of identifying additional reserves.

New mining and processing equipment, and modern exploration techniques over the past 30 years, made the revival of the Frances Creek iron ore field potentially extremely rewarding, he said.

All necessary studies for permitting the mining operations have been completed or are under way.

Territory listed on the ASX in early March on the back of a $10 million IPO that issued shares at 20c.