PROJECTS
Location
The iron ore and coal projects currently being developed by WPG are located in central South Australia, with the proposed accommodation village to be located approximately 70kms south of Cobber Pedy.
Previous Exploration
The coal and iron ore assets were originally explored by the South Australian Government then a private company during the mid 1990s as part of the South Australian Exploration Initiative and the South Australian Steel and Energy (SASE) joint venture.
The SASE project was targeting the construction of a pig iron smelter in South Australia, with iron ore and coal to be sourced locally.
A demonstration plant was established in Whyalla in 2000, however limited funding and a fire at the plant in 2002 saw the project halted. Between 1995 and 2002 an estimated $80m was spent on the SASE project.
The majority ownership of the project remained with Felix Resources who sold the iron ore assets to WPG in late 2006.
Royalties
WPG has 100% of the iron ore assets with a small production based royalty for ore from both Peculiar Knob and Hawks Nest payable. At current prices the royalty is ~A$1.30/t of ore from Peculiar Knob and from Hawks Nest the rate is $1.00/t of marketable product sold. Upon granting of a mining lease at Hawks Nest a one off payment of $350,000 is to paid.
Peculiar Knob
The Peculiar Knob iron ore deposit is located ~30km northwest of OZ Minerals Prominent Hill Mine. The deposit is situated within a Mining Lease surrounded by OZ Minerals exploration tenements.
The Peculiar Knob hematite resource is a hydrothermally altered Banded Iron Formation, with the resultant
specular hematite very high in iron content and low in impurities. The coarse crystalline nature of the ore will
be readily amenable to crushing and handling. The ore body strikes NE/SW for ~1,100m and dips steeply to the northwest.
High Grade DSO grade
The JORC compliant resource of 19.2mt @ 64% Fe has been closed off along strike but remains open at depths greater than 170m. The reserve figure is 15.4mt @ 62.7% Fe.
The ore body is covered by ~20m of overburden, the life of mine strip ratio is 3.6:1 Ore will transported from the pit to a rail siding at Wirrida along a 95km private haul road, crushing facilities will be located at the siding.
As part of a BFS completed in 2007 geotechnical and metallurgical studies have been completed on the deposit. The BFS is currently being revised in light of the decision to utilise Pt Pirie and changes to project costings since 2007.
Hawks Nest
The Hawks Nest project contains a sizeable magnetite deposit and a DSO hematite resource. There has been a high level of resource definition undertaken on the deposits, prior to access restrictions and global financial conditions slowing activity.
Given the uncertainty surrounding access we have not ascribed any value from the Hawks Nest deposits to
our valuation. We will be keenly watching the recommendations put forward in the current Hawke Review
with regards to access within the WPA.
There is a chance that the hematite resources could be developed as they sit outside of the WISCO JV and therefore may not raise the concerns of Defence on foreign ownership of assets within the WPA.
Hawks Nest Hematite
The hematite resource at Hawks Nest is contained within 2 deposits (Buzzard and Tui) that lie less than 1km apart, total hematite resources are 18.4mt @ 62.0% Fe.
The massive hematite mineralisation is contained within stacked lenses of varying dimensions and is part of a
haematitic banded iron formation (BIF) sequence that abuts and parallels a northeast-southwest trending fault structure.
The location of the crushing and rail loading facility to be constructed as part of the Peculiar Knob development will support the longer term development of the Hawks Nest deposits.
The main hematite deposit at Buzzard is covered by ~35m of soil and has LOM strip ratio of 6.3:1. The development of Buzzard and Tui is intended to run in conjunction with production from Peculiar Knob.
Hawks Nest Magnetite
At Hawks Nest the magnetite resources are situated in 6 separate occurrences of varying size, all are located
within close proximity.
The main deposit at Kestrel is a broad anticlinal structure that has been drilled to 135m in depth and remains open at depth and along strike. The magnetite is contained within a steeply dipping banded iron formation, with life of mine strip ratios approximately 1.6:1. At 220mt @ 36% Fe Kestrel is the largest of the magnetite deposits.
As part of scoping study completed in 2008 the project capital requirements were put at $720m and operational costs at A$58/t. A processing plant designed to process 13.5mtpa ore to produce 6.0mtpa concentrate was modelled.
The ore was tested for recovery rates and had a good recovery rate of ~45%, producing a concentrate of 65% Fe with negligible phosphorus and ~8.6% Si02.
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