Trafford to launch iron ore spinoff

West Perth-based gold and uranium explorer Trafford Resources Ltd will launch an iron ore spinoff later this year to take a 50 per cent stake in its Wilcherry Hill iron project.

The new company, to be called IronClad Mining Ltd, will be responsible for ongoing ore definition drilling, a full feasibility study into the development, production and marketing of the iron ore and for subsequent construction, mining and marketing operations on the project.

Trafford will retain a 50 per cent interest in the project and a significant stake in IronClad Mining, as well as the rights to all other minerals in its tenements.

The full text of a company announcement is pasted below

The directors of Trafford Resources Limited (ASX code: TRF) are pleased to report their intention to seek public listing for a new iron ore company to develop the Wilcherry Hill crystalline magnetite iron deposit discovered by Trafford 30 kilometres north of Kimba, South Australia, late last year.

It is proposed that the new company, to be known as IronClad Mining Limited, will acquire a 50 percent interest in the Wilcherry Hill iron project from Trafford and be responsible for ongoing ore definition drilling, a full feasibility study into the development, production and marketing of the iron ore and for subsequent construction, mining and marketing operations.

The Trafford board are currently interviewing high profile candidates for the role of chief executive officer of IronClad Mining and hope to announce an appointment shortly.

Trafford intends to retain a 50% interest in the iron project and also retain a large shareholding in IronClad Mining.

Subject to ASX and other statutory approvals, current Trafford shareholders will receive a preferential entitlement to shares in IronClad Mining, giving them the opportunity to participate in the project development directly as shareholders in IronClad and indirectly as shareholders of Trafford. Trafford option holders will need to exercise their options in order to participate in this preferential offer.

Trafford intends to retain the rights to all other minerals in its tenements including gold, copper, uranium and any credits which may be produced with the iron.

The separate corporate structure will facilitate and provide initial funding for the early development of the Wilcherry Hill iron resource without distracting Trafford from the ongoing exploration of its highly prospective gold, uranium and zinc prospects or diluting current shareholdings in the company.

An independent quantitative study of the Wilcherry Hill iron deposits undertaken by Maprock Pty Ltd reported in early February that the Weednanna, Weednanna North and Ultima Dam East prospects contained a total JORC compliant, indicated and inferred iron ore resource of 44 million tonnes to a depth of 150m at an average in situ grade of 36.4%Fe. Maprock also identified an exploration target potential in the area in the range of 300 to 600 million tonnes of the iron rich, magnetite bearing material.

The crystalline magnetite discovered at Wilcherry Hill differs in quality (significantly higher weight recovery during beneficiation and significantly lower impurities) from any other magnetite currently being mined or considered for development in Australia and is regarded in the iron ore industry as being able to produce highly saleable premium products.

A desk-top study by ProMet Engineers (reported 29 March 2007) assessed a 2 million tonnes a year base case for development utilising open cut mining, crushing and wet beneficiation to produce either a 64% iron concentrate for export as sinter feed or a 70% direct reduction grade iron for pellet making.

ProMet estimated that a plant producing Blast Furnace (BF) grade could be built for approximately $A100 million with a further $88 million for infrastructure whilst a Direct Reduction (DR) plant can be built for an additional $25 million plus infrastructure. Direct operating costs (excluding transport) were estimated at $A22.02c a tonne for BF material and $A26.29c tonne for DR material.

The ProMet study will help provide the initial platform for the IronClad feasibility study and resource drilling program, but project optimisation, transport costs, market opportunities and national and international demand will clearly influence the final shape of the proposed iron project at Wilcherry Hill.