Iron ore revision sends Brockman shares skyward March 5, 2008 - 6:15PM
Shares in iron ore explorer Brockman Resources skyrocketed on news it has increased the resource estimate for its wholly owned Marillana project in Western Australia's Pilbara almost tenfold to 1.1 billion tonnes of iron ore.
The company's shares closed at $1.87 or 165.49% higher at $3.00 after hitting $3.21 in intraday trade.
The resource is compliant with Australia's mineral reporting standard, JORC, and comprises channel iron deposits with grades ranging from 55% to 60% iron as well as detrital ore with grades ranging from 40% to 62% iron.
Managing director Wayne Richards said the resource inventory was based on three deposits within the project area, 100 kilometres north of Newman.
The initial indicated resource announced last year, based on one deposit, was 43.5 million tonnes grading 57.6% iron.
Mr Richards said the upgraded resource significantly exceeded the company's previously announced target to confirm a mineralisation potential of at least 100 million tonnes.
``This gives us great confidence that Marillana has the potential to develop as a world-class iron ore project capable of producing ore as a direct shippable ore (DSO) product with an average grade of over 59% iron,'' he said.
A scoping study is underway for a potential 10 million tonne per annum DSO operation.
The Marillana project is near BHP Billiton's Yandi mine and Rio Tinto Ltd's Yandicoogina mine. On the other side of the Fortescue Rive lies Fortescue Metals Group's Cloudbreak project.
DJ Carmichael resource analyst James Wilson said the market had been ``blown away'' by the resource upgrade, not realising Brockman was sitting on such a large, JORC-compliant resource.
``Out of one billion tonnes, 499 million tonnes is DSO product ... so its a big deal,'' he said.
Mr Wilson said getting transport costs right would be the key to the Marillana project's success.
He said Mr Richards had previously held roles with BHP Billiton and at Andrew Forrest's former vehicle Anaconda Nickel.
``He's very advanced in negotiating offtake, I believe,'' Mr Wilson said.
``My worry with the detritals, if it's said to be upgradeable to 59% iron, is how much silica and how much alumina (contamination) is in that?
``High levels of contaminants would be hard to get rid of.
``But if it has low levels of contaminants, it's game on and it (the share price) will rocket once people recognise the fundamental value in the detritals.''
Industry observers expect iron ore prices to rise another 30% next year on top of the 70% increase expected this year.
BRM Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
