Previous estimates of a massive iron ore deposit are slowly...

Previous estimates of a massive iron ore deposit are slowly being proved up with upside surprises. Based on reports compiled by the Peruvian Minister of Energy and Mines (PMEM), Strike estimated the the following massive deposits when they acquired the projects;

1) Apurimac project - containing a global resource of 730Mt of high grade hematite and magnetite iron ore grading between 60% and 66% iron.

2) Cuzco project - containing a global resource of 500Mt of high grade iron ore (principally magnetite) grading +64% iron.

What the two major drilling programs announced this year have proven is that this is a huge resource capable of producing 20mn tonnes per annum. I will let you work out what that means in terms of cash flow and NPV at conservative iron ore prcies... (its big!)

An interesting nugget of information worth noting is that the intercepted ore is very low in impurities such as phosphorous. Low impurity content is an important factor in lowering total costs in the eventual processing of the ore.

In addition, while the grades have been world class, the thickness of mineralisation is huge and mineralisation is 'open' allowing for further extensions.

I expect that we will get the JORC resource estimate within 4 weeks (as stated in the announcement today) which will mean that institutions interested in advanced junior iron ore plays will have to take notice, especially if it is the vicinity of 200mn tonnes. And who knows what JORC they will have by early next year - maybe 500mn tonnes??? Entirely possible when reading todays announcement...

I wouldn't forget the in-specie transfer of Alara shares either - this will only add to returns over the next few months as the stock undergoes a substantial re-rating post JORC