Ferrowest acquires new iron ore project

THE BOURSE WHISPERER: Ferrowest (ASX: FWL) has executed a Sale and Purchase Agreement with Ngalia Resources to acquire up to 60 per cent of the Yalyirimbi iron ore project in the Northern Territory.


Project location. Source: Company announcement


The earn‐in requires the expenditure of $2 million on exploration and the establishment of an Indicated Resource estimation.

Ngalia has already spent around $1.4 million of the earn‐in.

Ferrowest said it is of the opinion the current Inferred Resource will only require selected diamond drilling and project related works to attain an Indicated Resource status.

The remaining 40 per cent of the project will remain held by Arafura Resources (ASX: ARU).

The project will be developed under an incorporated joint venture, subject to the completion of a bankable feasibility study, to be managed by Ferrowest as it completes the 60 per cent earn‐in.

“Yalyirimbi delivers on a number of key fronts for Ferrowest,” Ferrowest chairman Bryan Hughes said in the company’s announcement to the Australian Securities Exchange.

“We can apply the excellent experience and talent we have in the iron space to a project that can be advanced quickly.

“It has quite a low capital requirement and it can generate solid returns for the company as we start to develop our larger projects.”

The Yalyirimbi project has an existing Inferred Resource of 14.1 million tonnes of haematite at 27.1 per cent iron classified and reported in accordance with the JORC Code.

Ferrowest currently estimates the Exploration Target at the project to be 50 to 70 million tonnes at between 25 per cent and 29 per cent iron.

The company explained the current Resource is located in two zones totalling 1.5 kilometres in length, out of a 30km to 40km long formation that is yet to be explored.

Early stage test work Ferrowest has carried out at Yalyirimbi demonstrated that, with a crush to 1mm and gravity upgrading, a haematite fines concentrate of 63.5 per cent iron with 7.1 per cent silicon dioxide, 0.84 per cent aluminium oxide and negligible phosphorus can be produced.

Ngalia has completed an in‐house scoping study, which it claims suggests the project is robust and profitable at an assumed long term average iron ore price for 62 per cent iron fines of $120 per tonne.