Consolidated Minerals had a subsidary company called Consolidated Iron. They owned the tenements to the Channel Iron Deposits of Shaw River and Nullagine River. Alkane Resources (ASX:ALK) owned the tenements for Bonnie Creek.
Incidently there's two trains of thought regarding the initials BC in BC Iron. One was it was a geologist joke. Meaning that BC ~ meant Before Christ, conveying "old", since CID's are so old in structure. The other was that the initials were taken from Bonnie Creek. BC Iron infact takes it's name from Bonnie Creek.
Anyway, on the IPO, ALK was given 9M shares to be held escrow. Whilst ConsMin were given 15M shares to be held escrow. I find it curious that ConsMin were given 6M more shares for tenements that to this point, largely don't count on BCI's current DSO reserves.
So what's at Shaw River? Is there anything there that may improve our reserves? Or is it a bit like the results from the Dandy well at the Nullagine CID. That being, it's not bad ... around 50% Fe. But it needs work done for it to be economical.
I'll just digress for a second.
Chinese mills furnaces need a minimum Fe (iron) feed of 62%. The mills can lower this benchmark if they so choose, but at the moment that's the standard. If your companies ore is strong and is above 62% Fe. You can sell to the mill "lump" ore. If however your ore isn't strong and is below 62% Fe, you MUST sell your ore as a fines product. What I mean by strong is the ores structure. BC Iron has very weakly structured ore. That's because it's a very porous ore. So even if the Fe content was above 62%, BCI would still need to sinter the ore. A rough guide to how porous a material is, is the ore's LOI (Loss On Ignition) figure. The higher the LOI figure, the more porous the material usually is. This has it's benifits for the fines producer. Fines producers will get a higher upgrade in the Fe content the higher the LOI figure. The highest LOI figure that I'm aware of in the Pilbara is at BC Iron in the Bonnie Creek CID at Outcamp. Levels as high as 13.3% were recorded during drilling at the Outcamp well. However the average for the whole Bonnie CID is 12.4%. And 12.1% for the DSO at Bonnie. If some other mine has a higher LOI that's fine and dandy, I'm just not aware of it.
So what happens is the fines product is sintered so that the fines product can be converted to artifical lump. The heat level required will vary between 1000 to 1300 degrees. Usually the higher the LOI, the lower the heat level required. Unfortunately for Magnetite iron. Their product for the most part cannot be sintered the conventional way. Magnetites are too hard and need to be "pelletized" with extra ordinary heat levels inorder for the material to be converted. Getting back to hematites like BC Iron's. When the product is sintered the carbonates and crystallized water contained in the ore are burnt off resulting in an iron content upgrade. Because BCI's LOI figure is so high, that upgrade is very sufficient. The other bonus for BCI is that after sintering the ore becomes strong.
AGO's DSO is 56.5% Fe. It's LOI figure is 9.1%. AGO cannot lower that DSO number otherwise it'll go under the 62% Fe furnace feed requirement.
AGO:
1000Kg - 91Kg (carbonates and water) = 909Kg 565Kg Fe divided by 909Kg = 62.16% CaFe ~ Post Sintering
As you can see AGO just makes the 62% Cafe requirement. But that's ok, that's all that they need to do.
BCI however is killing it with the 57% Fe benchmark. Infact we are currently exporting as high as 57.5% Fe at the moment to give the brand "Bonnie fines" a good name in the market place. It's giving our Chinese customers a furnace feed of 65% CaFe, well above the 62% requirement. However if we so wanted to, I believe we could lower our export figure to 54.5% Fe. And we would still be committing to our 62% CaFe target/requirement. Mike touched on this recently when he was talking about simply dry screening lower grade CID to make it DSO. I don't fully understand what dry screening is, or why it's needed when the lower grade ore will be above 62% Fe after sintering anyway. I know FMG benifits their ore by de-sanding some of it. But that's because of an impurity problem with Silica. BCI's CID is well below any impurity problem in regards to Sulphur, Alumina, Phos and Silica. So it's not because BCI has an impurity problem. I figure dry screening is a process that benefits the ore obviously, beyond that, I have no idea. I also don't understand why some of the lower grade, say 55.5% Fe which is currently considered waste cannot be exported as well? As mentioned above, it passes the 62% CaFe requirement, and the impurity test by a country mile. I'm however not a geologist, so I figure there must be a reason. I'm just not aware of it. I'm afraid I also cannot understand why the strip ratio (ore/waste) for the mine's life will be 1:1. I know that's a great figure, amongst the best, but considering the LOI number that BCI has, and the ore quality, could it be lower? As mentioned above, why aren't we exporting what is currently considered waste @ 55.5% Fe???
That aside, if BCI does lower it's grade, the LOI figure also raises to near 12.4%. By the way, the CID for Bonnie Creek is 54.1% Fe. IF WE WERE TO EXPORT AT NEAR 54.5% Fe, WE COULD ALMOST DOUBLE OUR CURRENT RESERVES! That would blow the current 8 year mine life out of the water.
@54.5% Fe:
1000 - 124 = 876 545/ 876 = 62.2% Ca Fe.
Still higher than AGO's. Still above the 62% cut-off. Still exporting DSO with a P level sub 0.02%.
Let's pick on a mesa called "bamboo" at Shaw River. To be fair, we only have rock samples. And Rock samples can give a better reading than reality. However it could be worse as well. We need drilling results to confirm things one way or the other.
(20min delay)