magnetite tonnage, page-4

if you want a method to work out potential magnetite tonnage for mt Ida, this shareholder communication from Red Rock may help:

Dear colleague,

Please find enclosed our announcement.

The Migori developments are interesting, and there will be more to say on these.

However, I wanted to say a bit now about the Jupiter magnetite announcement.

People have been asking me how to interpret it. How big could the deposit be? The answer is, that at this stage I can just do back of envelope calculations like everyone else.

We know, because we are told by Jupiter in their announcement, that the deposit is flattish and at/close to surface. That is good, and quite unusual, and it suggests a low stripping ratio – one of the key variables.

We know, because we are told, that the ore has been subjected to some testwork that produced a ‘premium’ 70% plus concentrate. That is very good – another of the key factors.

We know, because we are told, that the impurity levels are ‘very low’. That is very important – this is a very clean ore.

We know that some of the drill holes hit wide bands of mineralization. There seems from the map to be some correlation with holes drilled near the magnetic highs. However the magnetic highs, which reflect (obviously) the presence of magnetite iron ore, were not the target of most of the drilling, which was focused on haematite iron ore, and so targeted away from the areas obviously predominantly magnetite. It may be a reasonable inference that further drilling focused on the magnetic high areas may produce even better results and greater thicknesses.

We know that the mineralization at surface extends over an area 1.4km by 6.5km. So we can assess area in square metres.

If we take the average thickness of the high grade ore encountered by the eleven 2009 drill holes, at 80m, we can begin to calculate possible volumes by multiplying the area by the depth in metres.

We know that magnetite has a specific gravity of 5.1 so we can multiply volume by that factor to get a starting point for a tonnage estimate.

We can then estimate whether it is possible – what one would have to assume – for resources to be 1bn t, 3bn t, 5bn t – or less.

The possibility of a small deposit may seem quite low. But there will also be, based on present knowledge, a limit to the likely size.

I hope that helps. Probably not! We are more than excited by the emerging story, and our confidence is much increased by having access to Geoff Wedlock’s experience and knowledge of the magnetite industry.