will deliver jorc resource later this year

Apollo Minerals Will Deliver A JORC Resource And A Scoping Study For The Mt Oscar Iron Ore Project Later This Year

By Charles Wyatt
March 09, 2010

There has been a bit of a gap in our coverage of Apollo Minerals. This was not because there was nothing going on, but because the then chief operating officer Richard Sealy delayed matters towards the end of last year, as he was expecting to announce a deal with a Chinese on the companys Mt Oscar iron ore project. In fact nothing materialised, but deals with the Chinese do tend to take a long time. Anyway, Richard has since departed Apollo, and in his place is Gavin Daneel, an economic geologist who has plenty of experience conducting exploration and development programmes in the Pilbara region of Western Australia, where Apollos Mt Oscar project is situated. The tenements cover a large proportion of Mt Oscar itself, with Fox Resources owning the rest. Just to the north is the Cape Lambert iron ore project which was acquired in 2008 by China Metallurgical Group for A$400 million. At the time, the resource there was estimated at 1.5 billion tonnes, but the grade of the magnetite was lower than at Mt Oscar, which lies on the same Archaean Cleaverville formation.
Apollo's tenements are close to existing road, rail, and port infrastructure, and towns. The Robe River railway line crosses them, and under recent proposals announced by the Western Australian government, Apollo would have access to this railway line. It would provide direct transportation to Cape Lambert, located 25 kilometres to the north, where Aquila proposes to construct its multi-user Ankatell Point port. In addition, the North West Highway also crosses the Apollo tenements, and a number of major regional centres such as Karratha and Roebourne are close by.

A talk with Gavin Daneel reveals that the companys strategy has changed quite significantly since he came on board. He is sympathetic to his predecessors approach, as the acquisition of Cape Lambert had certainly given the impression that the Chinese, who have much experience of magnetite projects, were prepared to buy anything they could get their hands on. The financial fiasco in 2008/9, however, resulted in them wanting to know a lot more about any project before starting serious talks.

A JORC resource estimate, Gavin reckons, is now the starting gate, so that is what he intends to deliver later this year. Before that can happen, however, a lot of preliminary work is needed, and this is starting with detailed geological mapping. A team of geologists is now on site. When Minews suggests that it is not before time that Apollo is carrying out such a programme, Gavins reply is a dry chuckle. During the June quarter he intends also to do some drilling, as well as further metallurgical testwork. The drilling will be aimed at testing the banded iron formation across and along strike, to ensure that the deposit is consistent, as misleading results can be gained from the fine grained magnetite. What comes across very clearly from Gavin is that he is determined to know everything possible about the deposit so that a flaw does not appear further down the line.

The only drilling carried out so far at Mt Oscar, which took place just after he came on board, showed total intercept widths of 768 metres, which compared very nicely with the 560 metres that geophysical modelling had led the company to expect. This appears to be due to tight folding in the geological structure. The average grade within the two principal horizons came in at 35.2 % iron, which compares favourably with other similar projects in the region. The highest grade from shallow cumulative intercepts was 43.8% iron.

So far, so good, but now it is onwards and upwards to the initial JORC estimate, and the latest news is that an initial exploration target of up to 650 million tonnes of magnetite-bearing banded iron formation has been set for Mt Oscar and Oscar East together, with a targeted grade of between 31% and 37% iron. Oscar East was bought from Thundelarra Exploration at around the time the previous round of drilling was taking place. It is 10 kilometres east of Mt Oscar, and is prospective for higher grade haematite as well as magnetite. Independent consultants have estimated that it could contain a magnetic banded iron formation mineralisation target of 100 million tonnes.

More drilling is now planned, and further metallurgical testwork will take place. Last month the company revealed the results of Davis Tube Recovery testwork. These showed concentrate grades of up to 64% iron, while metallurgical testwork on composite RC drill samples produced concentrate of 61.6% iron and 10.9% silicate. The concentrate grades are fine, but it is this silicate content that Gavin wants to reduce, as although up to 7% is acceptable to Chinese smelters, the limit for European smelters is, he says, not much more than 3%. The ongoing metallurgical testwork will therefore investigate means by which this content can be reduced, and more will be known by the time the scoping study starts in the summer.

This study will not be usual one, designed simply to test the economics of the project, but will go much further. A lot of alternatives will be fed into the model. The actual mining should be straightforward as the banded iron formation outcrops in prominent ridges up to 150 metres in height. One question to be investigated in the scoping study will therefore be the optimum rate of production.

Another will be whether it would be economic, or even possible, to transport the ore to be concentrated at a nearby plant where it might be used for blending, and where the silica problem could be minimised. Gavin even mentions taking it by slurry pipe to Cape Lambert, with water being returned in the pipe to the mine.

In the meantime, he points out that he is still being contacted by overseas parties interested in participation in what is now one of the few iron ore projects in the Pilbara wholly owned by an ASX-listed company. Some of these simply want to catalyse a merger between Apollo and Fox so that the whole of Mt Oscar can be promoted as a single entity, but others have more useful suggestions in terms of funding and offtake. Gavins in no hurry, however, as he is determined to get the scoping study and the resource estimate in the bag before making any commitments. There will be a steady flow of news from the company over the coming months, as the new strategy put in place by Gavin Daneel unfolds. It could prove to be a winner.

http://www.minesite.com/nc/minews/singlenews/article/apollo-minerals-will-deliver-a-jorc-resource-and-a-scoping-study-for-the-mt-oscar-iron-ore-project-l.html