Iron ore producer stakes out territory WITH a new chairman...

Iron ore producer stakes out territory




WITH a new chairman leading the way, iron ore producer Territory Resources is looking towards a bright future for its Frances Creek project. By Wally Graham – RESOURCESTOCKS*



Territory Resources' Frances Creek

Andrew Simpson, a self-confessed minerals commodities addict who moved into the chairman’s role in June, is enthusiastic about the immediate and longer-term opportunities available to the fledgling producer.

A corporate and marketing executive with more than 30 years experience in the field of international marketing and distribution of minerals and metals, Simpson is recognised as one of Australia’s foremost commodity market analysts with a “fit to market” discipline that focuses on security of income and increased value.

Recent successful directorships, including chairman of rapidly expanding and highly profitable Swick Drilling, underline his capability for this important role.

Following his appointment, Simpson moved quickly to outline to his shareholders, and the market in general, the present and forward position of the company.

“Territory Resources has done a lot of hard work in getting the flagship Frances Creek project operational,” Simpson told RESOURCESTOCKS.

“Frances Creek has moved past all the barriers of entry and today is one of only a few Australian companies that are genuine iron ore exporters.

“It has a railway line, a good loading port and we are only seven days from China. We are currently operating at 1.5 million tonnes per annum, but by December this year our plan is to have moved to an annualised rate of 2.25 million tonnes and some time during 2009 to a level of 2.5 million tonnes per annum.”

Territory Resources owns 100% of the Frances Creek haematite project from which it is producing and shipping iron ore. This fact, and because it has the benefit of good infrastructure, differentiates Frances Creek from the projects owned by the company’s peers.

The project is just 15km from the Alice Springs to Darwin railway line and 190km south of the newly refurbished port of Darwin, which is the closest Australian port to China.

This is another bonus point for the company as the marketing of the company’s ore is handled by the Hong Kong-based Noble Group via a life-of-mine marketing agreement.

“The iron ore industry is really about infrastructure,” Simpson said.

“You can have the most fantastic resource in the world, but actually getting it to market is the major issue.

“Our strength as a business is that we are actually operating and we are producing, as opposed to a number of iron ore aspirants that are still just talking about it.

“The market for iron ore is obviously extremely strong and it looks as though it is getting even stronger. We are maintaining a fully sold position and expect to do so for the foreseeable future.”

Territory Resources now plans to re-establish its primary focus on supplying bulk commodities to the global carbon steel industry, particularly in China and South-East Asia.

This will see Frances Creek take centre stage as the company gives the project its full attention in order to develop and expand mining operations in the region.

The Frances Creek iron ore mine is producing and supplying ore at about 1.5 million tonnes per annum, with a ratio of approximately 50:50 lump grade and fine grade ores with the average grade of the lump at 61.5% iron and 59.5% for the fines.

“Both products have been very well received in the market and we are currently going though a qualification program with a number of steel producers in southern China,” Simpson said.

“In the latter part of this year, once we have finished that qualification process, we will commence discussions for longer-term agreements.”

There are presently 10 million tonnes of inferred and indicated resources at Frances Creek; 1Mt is inferred with the remaining 9Mt in the indicated category.

The notable aspect of these resources is that they include the resources modified to produce Territory’s 6Mt of probable ore reserves. These resources also indicate a forward mine life of around 4-5 years.


TERRITORY Resources has committed to three basic targets over the next 12 months in relation to forward production and extending the current life of the mine.


“We will commit $11 million this year to exploration,” Simpson said.

“We have a specific target during the next two years where we are planning to double the size of the existing resources to approximately 20 million tonnes.

“Our second target is to achieve that annualised rate of 2.5 million tonnes by 2009 while the third is to maintain our continuing improvement through developing greater efficiency in our mining and processing as well as ongoing economy of scale benefits.”

Simpson’s fellow board members and senior management at Territory Resources bring with them a high level of expertise in corporate and operational management associated with the mining industry, especially in supplying bulk commodities to international markets.

Managing director Allan Quadrio is an experienced and qualified metallurgist with 25 years experience in mining operations. Quadrio has performed as resident manager for a number of mine operations, including gold and nickel projects, within Western Australia.

He is a former operations director of Consolidated Minerals and was responsible for the successful development and management of the Woodie Woodie manganese mine.

Finance director Ian McCubbing is a chartered accountant with more than 25 years experience in investment banking, corporate finance, and mergers and acquisition in the corporate world.

McCubbing has previously worked as a chief financial officer and has spent more than 12 years with Australian Securities Exchange-listed industrial and mining companies in senior financial roles.

The board was strengthened by the recent appointment of Richard Elman, founder and chief executive of the Noble Group in Hong Kong. Elman has more than 40 years experience in the physical commodities trading industry.

As CEO of Noble, he is responsible for a global commodity business with more than 100 offices in 40 countries and more than 4000 customers.

Noble Group is a market leader in managing the global supply chain of agricultural, industrial and energy products. The company manages a diversified portfolio of essential raw materials, integrating the sourcing, marketing, processing, financing and transportation.

Noble owns coal and iron ore mines, grain crushing facilities, sugar and ethanol plants, vessels, ports and other infrastructure. The company also holds a 70% share of Crawley Resources, which holds a 27% shareholding in Territory Resources.
The appointment of Elman confirms the ongoing and high level of support provided by the Noble Group.

Simpson said the company is also planning to appoint two or three new independent directors in the short term with combined experience in exploration, mining and corporate management.

This year, the company will be spending around $11 million on exploration and 80% of this will be pumped into the immediate Frances Creek area, right around the current workings.

There are a large number of unknowns in this area that the company is eager to define and a significant amount of unfinished work from previous drilling campaigns that it intends to follow through.

“In the next couple of years we are almost totally moving our focus back to Frances Creek, including the further increase in production at lower costs, with the added bonus in of exploration,” Simpson said.

“This will not only provide strong profits and cash flow, but also secure a longer-term future.

“We will maintain our investments in the minerals sands industry, but apart from that, all our care and attention will be focused on Frances Creek.”