Ann: Letter of Intent signed on El Mutun Iron Ore, page-3

re: Ann: Letter of Intent signed on El Mutun ... 30 November 2009
The Manager
Companies Announcement Platform
Australian Stock Exchange Limited
LETTER OF INTENT SIGNED ON EL MUTUN PROJECT – AMONGST WORLD’S
LARGEST UNDERDEVELOPED IRON ORE PROJECTS
Key Points
• Letter of Intent (“LOI”) signed with the Government of the Department of Santa Cruz in Bolivia to
progress approval to explore part or all of the remaining available area at the El Mutun Iron Ore
Project (the “Project”).
• Company in discussions with the national government of Bolivia about the Project.
• El Mutun is amongst the world’s largest under-developed iron ore projects - located in the east of the
Department of Santa Cruz bordering Brazil.
• Development of 50% of El Mutun is being undertaken by Jindal Steel and Power of India (“Jindal”)
with a financial commitment of more than US$2 billion – Jindal has commenced mining in recent
months.
• The remaining 50% of the Project is available for development.
• The Bolivian Government believes that El Mutun has the potential to host a target resource of 40
billion tons of iron ore grading 50% iron.
• The El Mutun Mountain has colluvial hematite on the surface and has a small number of drillholes
indicating iron ore to a depth of 330 metres downhole from drilling completed in the 1970s.
• This iron ore province includes the 2 Mtpa Corumba Iron Ore Mine formerly owned by Rio Tinto
(approximately 30 kilometres to the east of the Project inside Brazil at Moro de Urucum) which was
undertaking a feasibility study to increase production to 12Mtpa prior to the sale.
• The Company sees the cash generating potential of its Amayapampa Gold Project as the likely
source of funds for any early stage exploration.
The Directors of Republic Gold Limited (“Republic” or the “Company”) today announced that the Company
has signed a Letter of Intent with the Government of the Department of Santa Cruz in Bolivia to work jointly
towards exploration at the El Mutun Iron Ore Project in Eastern Bolivia. The Letter of Intent is signed by
Raul Barrosa Saso, Secretary of Mining, Energy and Hydrocarbons for the Government of the Department
of Santa Cruz. The Indian company, Jindal Iron and Steel has already contracted with the Morales
Government of Bolivia (through a state-owned enterprise ESM SA) to develop an integrated iron ore and
steel operation covering 50% of the available El Mutun concessions for a cost estimate of +US$2B.
The Letter or Intent is an important step towards enabling the Company to undertake an exploration
programme at El Mutun. The Company also needs to obtain relevant consents and agreements from the
national government of Bolivia.
Republic’s Managing Director; John Kelly, said:
“El Mutun is a significant project on Bolivia’s border with one of the world’s fastest growing economies,
Brazil. The LOI presents a significant opportunity for Republic and gives us the platform to build a truly
world-class iron ore asset base. The fact that Jindal, one of India’s largest steel manufacturers, has
committed over USD$2 Billion to developing perhaps the world’s largest underdeveloped iron ore project is
an encouraging step towards commercialising the project. The commitment to foreign investment in
Bolivia from local communities, State Departments and the Morales Federal Government is a direct result
of longstanding ties developed through the Company’s Amayapampa Gold Project.”
Republic continues to focus on developing its Amayapampa Gold Project and expects to update the market
shortly on a resource upgrade.
Technical Elements of the Project
El Mutun covers approximately 60 square miles, of which 90% lies in Bolivia and the remainder in Brazil.
The mountain rises 600 metres above the surrounding plains.
El Mutun was the subject of an extensive feasibility study carried out by US consulting group McKee in the
1970s, which included 3,400 metres of diamond drilling. The drilling encountered iron ore bearing
formations between 100 and 320 metres thick. The iron manifests principally in layers of oxides, with local
presence of the layer of carbonates. The principal minerals of iron present are hematite, magnetite and
siderite. The Bolivian Geological Survey (SERGIOTECHMIN) reports that there are three types of iron
deposits in the mountain; primary iron ore, colluvial iron ore and eluvial iron ore.
There are significant volumes of alluvial and colluvial material on surface, which is what Bolivia’s stateowned
mining company, COMIBOL, mined in the 1980s and 1990s. A simple screening process was
sufficient to upgrade the ore mined by COMIBOL to economic grades. The COMIBOL operation barged the
ore down the Rio Paraguay to the Atlantic Ocean at Buenos Aires. This is the same transport route that is
currently used by the Corumba Mine. This river is an international waterway from the Bolivian town Puerto
Busch, some 50 kilometres to the south of El Mutun right to the Atlantic Ocean.
Yours faithfully
John Kelly
Managing Director
Republic Gold Limited
For more information, please contact John Kelly on +61 418 577 759
Or Fergus Ross of 6 Degrees Media on +61 420 980 448
Republic Gold Limited
ACN 106 399 311
PO Box 2317 Mareeba Qld 4880 Australia
Phone + 61 7 4092 2594 Fax + 61 7 4092 3797 Mobile 0418 577 759
Registered Office: 144 Cobra Road Mareeba QLD 4880 Australia
E-mail: [email protected]
www.republicgold.com.au
JORC Compliance Statement
Information in this report that relates to Exploration Results and Mineral Resource Targets for Republic Gold Limited
is based on literature information compiled by John Kelly, Managing Director of Republic Gold and a member of the
Australasian Institute of Mining and Metallurgy. John Kelly has experience that is relevant to the styles of
mineralisation and types of deposit under consideration and to the activity which they are undertaking to qualify as a
Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Mineral Resources and
Ore Reserves”. John Kelly consents to the inclusion in this report of these matters, based on the information in the
form and context in which it appears.
Location map, thick yellow line is the Bolivian border with Brazil
Colluvial Hematite From El Mutun
Drilling Site On Top of El Mutun
Looking East Into Brazil From the Top of El Mutun