interesting storyPilbara iron explorer heads under water...

interesting story

Pilbara iron explorer heads under water

Charlotte Dudley
Thursday, 26 June 2008

A WESTERN Australian junior has announced “off the planet” plans to explore for iron in the shallow water off the Pilbara coast.



Drilling at De Grey Mining's Three Kings platinum project at Indee.

Perth-based De Grey Mining is set to secure title over nearly 1300 square kilometres of shallow water tenements believed to be prospective for iron mineralisation.

The news saw the company’s stocks increase 20% to 78c in intra-morning trade.

De Grey has entered into an option-to-purchase Heads of Agreement with private company Geotech International to acquire a 640sq.km licence.

In addition De Grey has pegged a further 652sq.km tenement adjacent to Geotech’s licence, making for a total of 1292sq.km.

The two tenements, off Cape Preston and some 70km southwest of Dampier, occupy shallow waters of generally less than 20m deep.

Historical data has indicated potential for shallow deposits of up to 15% total heavy minerals, mostly in the form of iron oxides, De Grey said.

The company said the target mineralisation holds accumulations of unconsolidated iron oxide minerals in the seabed sediments formed by erosion from the Brockman Iron Formation.

The tenements lie offshore Citic Pacific’s Sino iron magnetite project and Australasian Resources’ Balmoral South magnetite project, and pre-competitive aeromagnetic data has indicated potential seaward extension of the iron mineralisation.

De Grey non-executive director Darren Townsend said the company became involved in the shallow water tenements through a Geotech staffer, whose own interest was piqued by a presentation at a recent Perth mining conference.

And while he described De Grey’s offshore venture as something a bit “off the planet”, Townsend compared the new development with the past perceptions of junior iron ore rock kickers.

“If you’d proposed that juniors were going to peg iron ore tenements around BHP and Rio in the early 90s, you would’ve been laughed out the room,” he told MiningNews.net.

“And the same with these big magnetites like Australasian Resources and Citic’s big magnetites near where we are, 10 years ago people would’ve laughed at you and now these things are getting close to going into development.

“We sort of think it’s a natural extension of thinking laterally and doing things a bit different.”

Townsend said while offshore drilling and mining activity would require a specific set of environmental approvals and permits, the process for pegging shallow water tenements was the same as that involved for conventional land tenements.

Extraction at the tenements would likely involve dredging iron hosting material into a barge-mounted gravity concentration plant, technology that Townsend said was already widely used to recover mineral sands and in offshore diamond mining.

“It’s not new technology, it’s all pretty standard stuff and is reasonably readily available,” he said.

Depending on how the new tenements progressed, Townsend said De Grey may consider teaming up with an established underwater exploration company to benefit from its expertise.

The deal with Geotech would see De Grey pay an initial $A10,000 and issue 2.5 million shares at 7.5c.

On granting of the tenement, De Grey will pay an additional $50,000 and issue a further 2.5 million shares for a two-year option to purchase.

De Grey can exercise the purchase option for $250,000 and 5 million shares within the two year option period.

Alternatively, it can extend the option period a further two years for $100,000 and 2.5 million shares.

Geotech will retain a 1% royalty on any minerals mined.

Once the deal with Geotech was finalised, Townsend said the next steps for De Grey would be to examine the existing data, find out more about offshore exploration techniques and pursue the necessary approvals to begin exploration.

De Grey shares gained 13c or 20% to 78c before slipping to 70c.