ASX Announcement – Aurox Resources Limited, 1/245 Churchill Ave, SUBIACO, WA 6008 Telephone 08 9382 4477, Fax 08 9382 2012 email contact: [email protected], website: www.aurox.com.au 15 January 2007 e-lodgment Company Announcements Office Australian Stock Exchange Limited 2 The Esplanade PERTH WA 6000 BALLA BALLA PROJECT UPDATE Feasibility Study Aurox Resources Limited (“Aurox” or “Company”) is pleased to announce that all sections of the Balla Balla vanadium bankable feasibility study (“BFS”) and associated titanomagnetite concentrate pre-feasibility study (“PFS”) are complete, apart from the financial modeling section, which requires the final off-take pricing numbers currently being discussed with Chengde Iron & Steel Group Co Ltd. Aurox commenced work with Lycopodium Engineering Limited (“Lycopodium”) on the BFS in February 2006, initially focusing on the development of plant and infrastructure capable of producing 4,700 tonnes of vanadium (5900 tonnes ferrovanadium- FeV80) annually. Following the signing of a Heads of Agreement with two major Chinese resource companies in September 2006, Aurox and Lycopodium commenced PFS work on a 2 million tonne per annum (“tpa”) titanomagnetite concentrate circuit to operate alongside the vanadium plant. Financial evaluation of the BFS and PFS by Aurox and its advisors has determined that developing the Balla Balla project in two stages is the most effective and low-risk avenue to timely production and cash flow. The first stage will be the construction of a 2 million tpa concentration circuit. The capital cost of this stage is estimated to be between AUD140 and AUD160 million and includes all plant and infrastructure required to function as a stand-alone operation. The second stage will be the construction and operation of the vanadium circuit, which will run alongside the titanomagnetite concentration plant. The capital expenditure for the vanadium plant is currently estimated to be a further AUD290 million; however, this figure may vary depending upon the prevailing capital cost environment at the time when the second stage is initiated. Summary details of the vanadium BFS and titanomagnetite concentrate PFS will be released in the December 2006 Quarterly Report. Lycopodium estimates the time required to upgrade the titanomagnetite concentrate PFS to a bankable-level document is 4 months. ASX Announcement – Aurox Resources Limited, 1/245 Churchill Ave, SUBIACO, WA 6008 Telephone 08 9382 4477, Fax 08 9382 2012 email contact: [email protected], website: www.aurox.com.au Status of Chengde / MCC Agreement On the 5th of September 2006 Aurox advised the ASX that it had entered into a Heads of Agreement (“HoA”) with Chengde Iron & Steel Group Co Ltd and China Metallurgical Group Corporation (“Chengde/MCC”) whereby these major Chinese companies would together participate as a significant joint venture partner to the Balla Balla Iron Ore & Vanadium project. Under the HoA, Chengde/MCC will farm into the Balla Balla Vanadium and Iron Ore Projects via cash payments of AUD20 million following completion pursuant to the Balla Balla Option Agreement. Chengde/MCC will also provide funding of AUD33.6 million by way of a convertible note and a share placement. The HoA also provides for Chengde/ MCC to purchase by way of proposed off-take arrangements 70% of the Balla Balla ferrovanadium production and a minimum of 2 million tpa of titanomagnetite iron ore concentrate for the life of the vanadium and iron ore projects respectively. The HoA is subject to a number of conditions precedent including; 1) shareholder and regulatory approvals, 2) negotiation and execution of the convertible note deed, JV and share placement agreement and 3) review of the completed Vanadium BFS by Chengde/MCC. It was intended that Chengde/MCC and Aurox negotiate formal Joint Venture, off-take, convertible note and share placement documentation prior to the end of September 2006 as outlined in the HoA and stated in the ASX announcement. However it was necessary to push back the timetable for these negotiations to the first quarter of 2007 due to the following: 1. delays to a Balla Balla site visit by key Chengde/MCC personnel (now complete); 2. time required by Chengde/MCC to translate and review the 2M tpa titanomagnetite concentrate PFS (now complete); 3. time required for Chengde/MCC to evaluate a new conceptual mining study which includes the 11 kilometre strike of titanomagnetite extending to the west and east of the current BFS limits where resource definition drilling completed in November demonstrates excellent continuity of Fe, V, Ti mineralisation (now complete). All relevant data is in the possession of Chengde/MCC, and Aurox is in daily discussions with regards to providing clarification of any aspect of the Balla Balla project. Conceptual Mining Study In December 2006 mining consultants Orelogy Pty Ltd (“Orelogy”) carried out a conceptual mining study focused on minimising the strip ratios associated with mining the ore required to produce 2 million tonnes of titanomagnetite concentrate per annum. The study concluded that a strip ratio of 1 tonne of ore to 0.25 tonnes of waste could be maintained for 12 years within the 5 kilometre BFS area. Incorporating the 11 kilometres of Balla Balla titanomagnetite extending east and west beyond the BFS area, the study demonstrated that the same 1 : 0.25 ore-to-waste strip ratio could be maintained for 30 years. ASX Announcement – Aurox Resources Limited, 1/245 Churchill Ave, SUBIACO, WA 6008 Telephone 08 9382 4477, Fax 08 9382 2012 email contact: [email protected], website: www.aurox.com.au On 5 January 2007 Aurox announced that Golder Associates will undertake 3D block modeling work to define new resources for the BFS, Don Well and Caine Well areas. The modeling work will focus on optimising the vanadium and iron mineralisation, as both products are present in economic quantities. The new block models will subsequently be delivered to consultants Orelogy for calculating optimal economic and mining parameters, followed by the estimation of new JORC-compliant reserves. The strip ratio is a key mining parameter in determining the amount of material that can profitably be removed and processed. As noted, the current Balla Balla reserve estimate does not include any titanomagnetite falling outside the current BFS limits. Nor do the current reserves include titanomagnetite that is weathered (oxide) or has a vanadium content of less than 0.6%. The weathered and lower-grade material can, however, be processed and sold as titanomagnetite concentrate for steelmaking mill feed and thus will be included in the new reserve estimation. The upcoming work by Orelogy is expected to dramatically increase the reserve position of the Balla Balla project. Aurox Resources Limited Charles Schaus Managing Director
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