THE BOURSE WHISPERER: Grange Resources has completed a Definitive Feasibility Study (DFS) at the company’s Southdown magnetite project, located 90 kilometres from Albany in the Great Southern region of Western Australia.
Southdown is a Joint Venture between Grange (70 per cent) and Japan’s Sojitz Resources & Technology (SRT) (30 per cent).
Grange has spent in excess of $150 million on drilling, test work, land acquisition, permitting and engineering studies advancing Southdown to its current position.
The project boasts JORC Code-compliant mineral resources of over 1.2 billion tonnes at 34.1 per cent Davis Tube Recovery with over 510 million tonnes in the measured and indicated categories and Ore Reserves of 397 million tonnes at 35.69 per cent DTR.
The company said the DFS has confirmed a mine life of 14 years at Southdown, mining 387 million tonnes of reserve.
Grange, which also owns the Savage River magnetite project in Tasmania, said the DFS had confirmed Southdown as one of Australia’s foremost magnetite projects.
“Southdown is a robust, practical and financially attractive project with all the necessary infrastructure and port access that large projects like this need,” Grange Resources managing director Russell Clark said in the company’s announcement to the Australian Securities Exchange.
“The project will employ an estimated 2000 people during construction and provide ongoing work for 600 once fully operational.
“It will not be dependent on a fly-in, fly-out workforce like many of the projects currently being developed elsewhere in Western Australia.
“Instead, most of the workforce will be recruited locally, providing the project with some insulation from the skills shortages affecting other areas of Western Australia.”
The Southdown project has been designed to produce 10 million tonnes per annum of high-grade, quality magnetite concentrate that Grange anticipates will command a premium price in the iron pellet feed market.
Location of Southdown Joint Venture project including power and pipeline routes. Source: Company announcement
The project comprises a number of components, all of which Grange has advanced through the DFS stage.
– Open cut mine;
– Transmission line for power supply;
– Desalination plant for water supply;
– Slurry pipeline and return water line; and
– Albany Port expansion to treble its current capacity.
“We have firmed up many important aspects of this project during the DFS phase,” Clark said.
“The capital costs estimates are in line with expectations and the operating cost forecast remains very attractive. Southdown will produce some of the best quality concentrate in the market with high iron levels and low contaminants. Kobe Steel has recently shown its confidence in the quality and the value of the project, buying an indirect 10% stake in it in March 2012.”