Ann: Yerecoin magnetite project Scoping Study fin, page-3

re: Ann: Yerecoin magnetite project Scoping S... Yup - pretty good. But don't expect the market to notice.

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Giralia to initiate partner search by mid-year
Tuesday, 9 February 2010

SOON-to-be iron ore producer Giralia Resources plans to initiate development partner negotiations by mid-2010 on its Yerecoin magnetite play in Western Australia.

However, the more immediate task is to finalise drilling on the property to enable an initial JORC-compliant resource to be released by the end of March.

The company had previously defined an initial exploration target of 200-250 million tonnes of magnetite grading 30-35% iron ore.

While Yerecoin will not be the first project to come online for Giralia its Daltons haematite property in the Pilbara is scheduled to start operations in 2011 it will provide a significant step-up in production for the company when it kicks off by late 2013.

Recent findings from an independent scoping study on development options for Yerecoin by magnetite specialists ProMet Engineers has already pointed to a viable project based on a 2.5Mtpa base case scenario.

Unlike the $A50 million capital cost estimated for Daltons which Giralia believes it can fund internally, Yerecoin is expected to have a price tag of around $415 million.

However, the project has the added advantage of being able to utilise existing rail and port infrastructure.

Concentrate from the mine could be hauled over existing rail networks to Kwinana for export, or for possible sale to a potential local user of magnetite at Kwinana who has access to the rail network.

In terms of securing a development partner, Giralia managing director Mike Joyce said he was conscious of making sure any offtake would be independent of major shareholders.

We have had a lot of interest, and we have been inundated with enquiries, he said.

Once we have a handle on the project and the resource, we should be close to putting a prefeasibility study together and that is when we would start looking for a partner.

The base case model was based on a traditional blast furnace (BF) grade product, but the advantage of Yerecoin material is that it does not require a fine grind.

Because of its beneficiation characteristics, the mineralization does not require grinding to 45 microns to achieve BF grade, so a number of other processing and product specification options were considered, Joyce said.

ProMet identified potential for further upside, including further increasing the size of the product to around 150 microns, and therefore its attractiveness as a sinter feed blend and improving the quality of the product to direct reduction grade (greater than 70% iron ore) to reduce the impact of export logistical charges.

Giralia has around $60 million in the bank, as well as other iron ore properties in the Pilbara, a gold property and an interest in a uranium property in South Australia (Lake Frome Joint Venture).