Hawsons Iron Project, NSW, Magnetite Iron Ore, JV - Pure Metals

HAWSONS IRON PROJECT, NSW (CAP 64%) – SUPERGRADE SOFT ROCK MAGNETITE

 

Hawsons is Carpentaria’s flagship project with its ‘Supergrade’ product, super-competitive cost targets and super location near Broken Hill offering the potential to become a long-term, low cost premium iron business.

Highlights

  • Supergrade product with potential to deliver amoungst world’s best pellet feed product, including direct reduction quality
  • Low costs due to unique soft rock, enabling simple liberation of a premium magnetite product
  • Existing port, power, rail and road infrastructure, with access to an experienced mining workforce at Australia’s home of mining, and with an identified water resource
  • Targeting production of 10-20 Mtpa of Supergrade product (>70% Fe) for 50-100 years
  • Reliable and secure Supergrade supply targeting delivery to key markets at under US$50/t (based on targeted all-in costs and exchange rate of A$1.00:US$0.72)
  • Capital costs globally competitive targeted at US$145-175 per tonne of capacity (excluding pre-production mining costs)
  • Project approvals and feasibility studies can be completed within 2 years, with a further 2 years for construction
  • Optimisation opportunities available to lower costs
  • Targeting production by end of decade with Hawsons project first in line in next development cycle                                                                                         

                                                 

                                                             Location of Hawsons Iron Project and major infrastructure

Project Summary

The Hawsons Iron Project has the potential to deliver Supergrade magnetite concentrate (70.3% Fe and 2.28% SiO2+ Al2O3) for pellets at volumes greater than 10 Mtpa for more than 50 years.  The reliable and secure supply would be delivered by 180,000t ships to ports in China, Asia and the Middle East at a targeted price under US$50/t all in costs (including  administration, sustaining capital and royalties). The grain size would be 97% less than 38 microns.

Capital costs for a 10Mtpa operation are targeted to be globally competitive.  Study results show a capital intensity target of approximately US$145-175/t of annual production capacity is reasonable because of the availability of existing infrastructure.  Given changing input costs globally and the project’s near prefeasibility stage of development, there are significant optimisation opportunities to further reduce costs.  An on-site pelletising option is also under consideration.

A potentially very competitive incentive price of development and the highest quality pellet feed available will ensure Hawsons is best placed to attract support from financiers and end users when the project development cycle restarts.

The project is supported by prefeasibility study level engineering, an independent JORC resource statement and significant metallurgical test work. 

Carpentaria has recently completed pilot plant test work and produced over 500kg of Supergrade concentrate for pelletising test work and product marketing.  The product marketing program continues to return significant interest from a wide section of markets, including the high value direct reduction (DR) market. 

The project has the benefit of established infrastructure, including rail, road, port and power, along with an established mining workforce at nearby Broken Hill. Sufficient project water has been confirmed by drilling and power will be sourced from the existing electricity grid. The project is also capable of being scaled up to 20Mtpa production. 

Project approvals required from the NSW government are well underway and Carpentaria is targeting completion of the environmental impact statement within 2016, with first production targeted within the decade.

Carpentaria owns 62% of the project, with joint venture partner Pure Metals Pty Ltd holding a 38% stake (diluting). 

Location and Tenement

The Project is located 60km south west of Broken Hill, NSW, Australia. Broken Hill is a famous mining town and has a highly skilled mining workforce.  The project is 35km south of the railway line, and about 30km west of the Silver City Highway and grid electricity transmission lines.

The project is contained within mining lease application 460 (ML460) and three Exploration Licences (EL), EL7208, EL6979, and EL7504 (Act 1992).  The western most boundary of the Licences is the NSW-SA state border. Carpentaria is the registered holder of these licences.

 

JORC Indicated and Inferred Resource and Exploration Target

  • Total Resource - 2.38 Billion tonnes at a mass recovery of 14.1% for 336 million tonnes of high grade iron concentrate (69.7% Iron and 3.03% combined silica and alumina, Davis Tube Weight Recovery (DTR)) with no other notable deleterious elements.
  • Exploration Target1 of 6-11 Billion tonnes at 14-17% mass recovery (DTR) for 900-1900Mt of concentrate, providing great confidence in a long life operation.

Note 1: The term "Target" should not be misunderstood or misconstrued as an estimate of Mineral Resources and Reserves as defined by the JORC Code (2004), and therefore the terms have not been used in this context. It is uncertain if further exploration or feasibility study will result in the determination of a Mineral Resource or Mining Reserve.

The company confirms that it is not aware of any new data that materially affects this resource statement since the first public announcement and that all material assumptions and technical parameters underpinning the resource estimates continue to apply and have not materially changed since first reposted (ASX Announcement 27 February 2017 and Table 2).

Hawsons

The current resource at Hawsons contains 336Mt of high grade concentrate (Table 1). The resource was estimated by independent geologists H&SC in February 2017.

Table 1 JORC Resources

  Concentrate Grades  
ASX Published Resource Category     Million Tonnes    Magnetite DTR%    Fe%    SiO2%    AI2O3%        P%     Contained Concentrate MT
       Total               2,380                       14.1    69.7        2.8       0.20    0.004                                       336
February 2017    Inferred               1,570                       13.9     69.9        2.9       0.20     0.004                                       217
February 2017   Indicated               810                       14.6    69.6        2.6       0.19    0.004                                       119

* based on over 2000 Davis Tube tests at 38um grind size, average density 3.06 t/m3

The exploration target1 of 6-11 billion tonnes for 900-1900Mt of concentrate at 69-70% iron is based on drilling and aeromagnetics. This in situ concentrate tonnage estimate compares favourably with many of the larger hematite resources around the world.

The ironstone occurrences are prominent in the aeromagnetics and the Hawsons Iron Project contains a number of large magnetic anomalies (see Figure).  The JORC resource was defined in the Core and Fold areas while the Exploration Target comprises an estimate of the material contained within the entire the project area.

The Hawsons geology has resulted in a unique ore type with the following key characteristics that provide significant advantages over other ore types:

  • The geology has mineralised marker beds traced over 5km and confidence in the homogenous and continuous nature of the mineralisation is high;
  • The mineralisation host is siltstone, meaning the natural grain size is ideal for slurry transport and pelletising;
  • The grains are loosely bound compared to typical crystalline iron formations, meaning the energy required to liberate the magnetite is much lower than other ores;
  • The magnetite crystals are pure and well-formed, allowing production of an exceptional concentrate quality.

Mining

  • Targeted costs are low because of a near zero waste to ore ratio after removal of overburden
  • Up to 600m mining widths – low cost mining methods
  • Mining costs reduce progressively over time

Hawsons Iron Project Cross Section
                            Hawsons cross section

It is proposed that mining will initially be via conventional truck and shovel, switching to in-pit crush and convey. The large volume and shape of the mineralisation provides potential to use these low-cost bulk mining methods.

The fresh rock strength is very low at 50-90Mpa (unconfined compressive strength).

Processing

  • Very soft material provides industry low processing costs
  • Energy used to process up to one third of other deposits per tonne of concentrate
  • Naturally fine, crystalline magnetite allows for Supergrade product

  • Proven processing routes can produce high grades to >70%Fe and <1.60 combined Silica and Alumina

Hawsons host rock, siltstone is a granular sediment different to the more usual chemical sediments typical of iron ore. The rock is soft and magnetite liberation is simple. This is demonstrated by engineering tests on energy and abrasion set out below.

Ore Property                    Units             Hawsons          Others
Bond Ball Mill Index kWhr/t 6.3-9.0 15.0-40.0
Abrasion Index - 0.06-0.17 0.27-0.61

 

A simple flow sheet based pilot ball mill testing and hydro-separator test work is proposed which aims to maximise the benefits of the soft ore. This flow sheet highlights one of the project’s key advantages, namely that the bond work index at Hawsons, a measure of the energy required to grind the material to a predetermined grain size, is approximately 7Kwh/t, a quarter or less of typical magnetite deposits, which facilitates much lower processing costs. 

This is because of the unique characteristic of the Hawsons material, in that it breaks along grain boundaries not through the middle of hard crystals.

Considerable metallurgical work supports the processing flow sheet including lab and 8 tonne pilot scale crushing and milling tests, work indices, material flow properties, petrography, mineral liberation analysis, thickener settling tests and magnetic separation tests. Some flow sheet improvements are yet to be built into the targeted cost structures and therefore further savings are possible.

Magnetite and Quartz crystals and grains
Hawson's granular sediment iron ore

The latest Test work results from the ALS Iron Ore Technical Centre in January 2015 revealed the following:

  • Supported the flow sheet assumptions that are the basis of the cost model and identified opportunities for improvement;
  • Demonstrated that a range of product specifications are possible for Hawsons, and that the ore does not present the liberation challenges typical of other ores;
  • Confirmed power usage from the pilot ball mill operation is approximately 7 kWh/tonne;
  • The pilot plant mass balances confirm the current plant design mass balances that were based on laboratory results and industry experience;

The final flow sheet will be determined after further consultation with market analysts.

Infrastructure

Water

  • Project water sufficient 90km from project

Power 

  • Located 35km from existing grid power that will provide low cost reliable power supply with low capital cost

Electricity will be supplied by the eastern states power grid via a new 35km transmission spur to an existing 220kv power line.

Wholesale electricity costs for grid connected projects in Eastern Australia are likely to be materially lower than those in Western Australia and those reliant on self-generated power. 

Transport

  • Existing 25t axle load rail line in place with 13Mtpa spare capacity
  • Existing port with 20Mtpa export capacity

The 10 Mtpa base case assumes slurry pipeline transport of the concentrate 60km to the existing rail line to a site near Broken Hill.

The product, will be loaded into wagons and railed by a third party 360km to Port Pirie. The rail line is open access and owned by government body Australian Rail Track Corporation.

The product, would be stockpiled at a new stockpile facility adjacent to the rail corridor at Port Pirie, and then transported via a pipe conveyor to an existing berth at Port Pirie.

Product would then be shipped using standard self-propelled, self-unloading barges into the Spencer Gulf for loading into Cape-sized bulk cargo ships for export. Carpentaria has also secured a first right of refusal with Flinders Ports for 12 million tonnes per annum.

Approvals

Mining Lease

The area of planned operations, including bore field to rail loading is covered by Western Lands Lease which has extinguished Native Title. Approval of the mining lease application (MLA) is subject to acceptance of the Environmental Impact Statement (EIS).

The criteria for the EIS are numerous; however Carpentaria is well advanced with the long lead items such as ecology surveys and cultural heritage surveys. Work to date has not identified any impediments to development. 

Technical works

The technical assessment is supported by:

  • Over 20,000m of drilling
  • JORC Resource estimate by H&S Consultants
  • Assumed 20-year project life
  • 10-20 Mtpa concentrate capacity study by GHD
  • Detailed plant, slurry pipeline, mine and other ancillary design by GHD
  • Pilot mineral processing plant test work by ALS Iron Ore Technical Centre, Perth ALS
  • Other mineral processing test work from CSIRO, Metso, ALS, JK Tech
  • Thickening and hydro-separation test work by Outotec
  • Ground water supply modelling by Geo-Eng Consultants
  • Consultation with Flinders Ports regarding product transport
  • Consultation with various potential equipment suppliers and operators

Further Information

Click here to view Project Information Memorandum

 

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