To answer each point in detail;
What process are they going to use for the Magnetite?
They are using a conventional crush, grind and magnetic separation process.
Why are they only going to upgrade to 57% Fe? Once you have set up to upgrade magnetite, you might as well take it higher. Normal high grade feed for a blast furnace is around 63% Fe.
The ore body is composed of titanomagnetite. The magnetite concentrate grades 57% Fe, 14% Ti, and 0.6% V. The titanium content of the magnetite crystals is why the concentrate product does not match the banded iron formation magnetites, which contain minimal titanium. It is a different ore geology to sedimentary magnetite iron ores, and hence is not necessarily ‘low quality’.
Where are they going to get the power & water from? (magnetite concentration is a power & water hungry beast)
Power is coming from the high-voltae transmission line ~2km from the tenement boundary. Water is from on the tenement. This is a question common to all magnetite mines, or all mines in general. I think Mt Gibson in particular is having greater issues with water than AXO.
Where are they going to put the tailings?
There will, firstly, be minimal tailings as compared to other magnetite mines. 68% recovery, plus if the ilmenite is recovered, equates to around 80% of the rock mass being payable. So the tailings will be store on the tenement. The tailings will be fairly benign, at 110 microns, in that it will be easily drained and non-acidic. If needed, they could backfill the pit. I don’t think tailings are much of an issue.
How are they going to transport the final product. Pellets? Slurry? Powder?
The product is envisaged to be transported to Port Hedland via a slurry pipeline. This will save ~$6/t on trucking. They intend to use the old northwest highway route, which is a gazetted road, for the slurry pipe route. This will alleviate some of the permitting risks viz. native title, involved in digging a slurry pipeline.
Are they close to the highway, and will they be able to use the highway?
They are less than 5km from the highway. They intend to use a slurry pipeline, but they can investigate permits for trucking if required.
Where are they going to export from? Do they have real estate at the general terminal at Hedland?
They will pipe to Port Hedland (`100km). An alternative is to pipe or truck to Ronsard Island (~25km).
What makes them so much cheaper than everyone else? Better ore? Shorter transport hauls?
This is covered in the AXO research report. Basically, it boils down to several factors;
The ore only needs to be ground to 110 microns, not 30-40 microns. This is a major energy saving just because there doesn’t need to be so much energy spent on breaking crystals finer and finer. Most crystals get tougher the smaller they get, so I think AXO’s ore is in a bit of a sweet spot on the energy vs returns curve.
The transport length is shorter than Gindalbie’s, and around the same as CFE, ARH and GRR. However, GRR has to wear a dock rebuild at Albany by itself, and ARH has to build its own port. So there’s a capital saving there.
The strip ratio is 0.8:1, which is a small saving on mining versus some projects. It’s certainly better than the 2.5:1 strip at Grange’s Southdown.
The recoveries. The recovery is 2x that of its competitors on mass. Thus, energy cost per tonne of ore shipped is basically half. For example, digging to milling to concentrate ratios are;
So, I ask, why did +70Mt of rock to produce 12Mt of concentrate, or even 40-50Mt to make 7-8Mtpa concentrate? Bit silly in my opinion. This is a giant saving in energy and expenses for Aurox.
The ilmenite content is potentially recoverable, whereas the only gangue material in most BIFs is quartz which is essentially worthless.
Although capacity costs are higher, the project carries less magnitude of debt. Therefore, combined with lower energy costs, each tonne of ore carries less capital expenditure commitments.
Lack of a pellet plant. Because the ore is a specialist product, it can’t be sold to most DR blast furnaces or pellet plants. The offtake with Chengde is basically the only way they’ll sell the ore short of to Russians. So that’s a limiting factor. However, the lack of a major capex item like a hot brick iron plant or a pellet plant is a $500M capex saving.
The proximity to grid power is a benefit. The lower power needed to grind the ore means the mine can run off a 220KVa power line versus having to build a gas power station, which is less capital costs, etc.
I think that it boils down to aiming for small and sensible versus big and brash. The capex costs for all magnetite mines are large, but you don’t seem to get a substantial saving by increasing capacities; eg CFE and ARH and GRR are planning triple or quadruple the capex spend of Aurox and are going to get double or at most triple the capacity. That’s not a winning equation in my mind, so why buy big, it’s just more debt risk?
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