ATLAS IRON LIMITED ASX Announcement 23 December 2015
Atlas Iron Limited (ASX: AGO) is pleased to advise on the results of the Corunna Downs Project pre- feasibility study (PFS).
Results of PFSThe Corunna Downs Project (above water table) has the potential to deliver 4 Mtpa of Lump and Fines Direct Shipping Ore (DSO) over an initial mine life of 5 - 6 years. Subject to iron ore market conditions, there are upside opportunities to extend the mine life by exploiting the below water table resources.
Initial capital expenditure estimates of $35M - $40M and C1 costs of $37 - $42/wmt are demonstrated under the PFS, suggesting that the Corunna Downs Project has economic potential.
The current Mineral Resource of Corunna Downs is 65.4Mt @ 57.2% Fe. Following completion of the PFS, a maiden Ore Reserve at Corunna Downs has been estimated at 21.1Mt @ 57.0% Fe. Full details about these Mineral Resource and Ore Reserve estimates are set out Appendix 1, including the assumptions and material modifying factors underlying these estimates.
The Corunna Downs PFS envisages the following key construction and operational packages being completed by contractors:
Public Road upgrades and site access road construction
Crushing and screening
Mining
Camp construction and accommodation catering & cleaning
Road train haulage into Port Hedland
Should the necessary approval be granted (including Board and environmental approvals) and prevailing conditions permit, the Corunna Downs Project would be Atlas' first mine development since Mt Webber. It has the potential to deliver replacement tonnes for the Abydos and Wodgina mines which are currently expected to cease mining over the next two to three years.
Based on the outcomes of the Corunna Downs PFS, Atlas' McPhee deposit, which is another 20km further south Port Hedland and 30km north of Nullagine, may now be viable should the cost regime demonstrated in the PFS and referred to above be capable of being replicated at McPhee.
The Corunna Downs project is subject to all necessary approvals, as well as a recovery in the iron ore price. No decision has been made on whether the Corunna Downs Project will proceed to development and any such decision would only be made after thorough consideration of the Company's financial and operating condition, as well as the prevailing and anticipated future market conditions. Accordingly, Atlas will continue to progress the approvals process for the project at minimal cost.
Atlas Iron Limited
ABN 63 110 396 168
Raine Square, Level 18
300 Murray Street Perth WA 6000
PO Box 7071
Cloisters Square Perth WA 6850
P: +61 8 6228 8000 F: +61 8 6228 8999E: atlas@atlasiron.com.au
W: www.atlasiron.com.au
The Corunna Downs Project is located centrally between the operating Mt Webber mine and the future McPhee project, and is located approximately 241km from Port Hedland and 33km from Marble Bar.
Recent changes to the cost of on-road haulage, along with changes to the previously envisaged mining sequence have resulted in the potential to deliver reduced costs and improved overall project viability.
Geology and Mineral ResourcesThe current Mineral Resource of Corunna Downs is 65.4Mt @ 57.2% Fe. There are currently 5 prospects at Corunna Downs that have defined JORC 2012 compliant Mineral Resources. These are Split Rock, Runway, Razorback, Shark Gully and Glen Herring. A location map of the deposits can be seen below.
Resource Class | Tonnes (Mt) | Fe% | SiO2 % | Al2O3 % | P% | S% | LOI% | CaFe% |
Measured | - | - | - | - | - | - | - | - |
Indicated | 42.1 | 57.3 | 6.0 | 1.8 | 0.09 | 0.01 | 9.3 | 63.1 |
Inferred | 23.3 | 57.2 | 6.7 | 1.6 | 0.06 | 0.01 | 9.1 | 62.9 |
Total | 65.4 | 57.2 | 6.2 | 1.7 | 0.08 | 0.01 | 9.2 | 63.1 |
A total of 508 Reverse Circulation holes and 20 Diamond Drillholes have been drilled across the Corunna Downs project area and have resulted in the Mineral Resources estimates shown above.
Mining at Corunna Downs would be undertaken by a proven mining contractor, managed by Atlas to mine the deposit by open pit method using conventional drill and blast, truck and excavator combination. The mining strategy contemplated by the PFS is based on 2 months of development and pre-strip prior to ramping up to full production of up to 4.0Mtpa over 4 months.
The Runway pit is closest to the ROM pad with low strip ratio and would be mined first followed by Shark Gully and then Split Rock. Split Rock is the largest of all pits within the project area and would be the main source of ore supply for the majority of the mine life. Ore from the pits would be hauled to the ROM pad for blending to the crusher. The finished product would then be stockpiled and transported to the Utah stockyard at Port Hedland by road.
The Corunna Downs Ore Reserves are shown below (see Appendix 1 for further details).
Deposit | COG - Fe (%) | Classification | Tonnes (Mt) | Fe (%) | SiO2 (%) | Al2O3 (%) | P (%) | S(%) | LOI (%) |
Runway | 53 | Probable | 4.47 | 56.9 | 5.3 | 2.6 | 0.04 | 0.02 | 9.7 |
Shark Gully | 51 | Probable | 4.75 | 57.1 | 5.9 | 2.5 | 0.10 | 0.02 | 9.5 |
Split Rock | 51 | Probable | 11.84 | 57.0 | 6.4 | 1.8 | 0.13 | 0.01 | 9.0 |
Total | Probable | 21.06 | 57.0 | 6.0 | 2.1 | 0.10 | 0.01 | 9.3 |
The operating philosophy adopted in the PFS is as per Atlas' current operations whereby mining, processing and haulage to port is contracted out. C1 costs estimated in the PFS are in the range of $37 - $42/wmt.
Capital Cost EstimateThe initial capital expenditure for the Corunna Downs Project, based on the production of 4Mtpa, has been estimated under the PFS to be in the range of $35M - $40M. The capital cost estimate for the Corunna Downs project is based on contractor estimates for mining, processing, related infrastructure, and product logistics.
MetallurgyThe metallurgical test work demonstrates that the Project produces good metallurgical properties including low abrasiveness and a high proportion of lump (57%).
Process PlantThe selected plant is a fixed dry crushing and screening plant, typical of those at other Atlas operations. The plant would produce 4Mtpa and would be built, owned, operated and maintained by a contractor.
The Plant, ROM and Product Yard would be located at the base of the Corunna Range. The location of the ROM, Plant and Stockyard Layout is illustrated below.
Haulage4Mtpa of finished product would be expected to be hauled from the mine to Utah Point using road trains by a haulage contractor and would adopt the same approach as at Atlas' other mines.
Atlas Iron Limited issued this content on 2015-12-23 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2015-12-23 00:16:11 UTC
Original Document: http://www.atlasiron.com.au/IRM/PDF/5748/CorunnaDownsPFSresults
