true value of gbg, page-10

I know this article is about another IO junior. But useful in understanding diff b/w hematite and magnetite and why the Chinese prefer the latter. Also useful when considering enviro concerns with Mungada (Hermatite), whereas Kangara (Magnetite) is not effected by the same enviro concerns ie don't sweat it.

From Mining News:

Magnetite a winner: Australasian

Tuesday, September 11, 2007
Kate Haycock

CHINESE steelmakers understand magnetite iron ore and want more of it, according to Australasian Resources, and the company's Balmoral South project is well-placed to take advantage of demand for the bulk commodity.

Drilling at Australasian Resources Blamoral Southern Block magnetite deposit in the Pilbara

Australasian managing director Andrew Caruso said the magnetite was emerging as an important commodity in the iron ore market in supplying Chinese demand.

"Magnetite produces a very high quality product. From a base of about 30 percent iron, it is beneficiated typically to about 70 percent iron, it has high value use for steelmakers … [and] it has very low impurities," he said.

Meanwhile, supplies of direct shipping ore hematite - which has dominated the iron ore landscape in Australia - were diminishing and quality was also falling, Caruso said.

"If you look at 1986 to 2006, we see that the average grade [of hematite] has diminished from 65 to 61 percent iron and, most importantly, the lump percentage has diminished to 20 percent," he said.

"And the majority of the [Australian] exports from China are fines products, which steelmakers in China have to further beneficiate through sintering, or pelletising."

Magnetite was commanding a premium in the market as a result of these properties, Caruso said.

"Currently, benchmark prices for fines and lump range between $ US50-60 per tonne," he said. "The high grades [in magnetite] are typically rewarded – if you use Brazil as a benchmark, the price for pellets in Brazil is between $US80-90 per tonne."

Caruso also noted the Chinese were comfortable with magnetite and wanted more of it, quoting comments from the Shougang Group, a major Chinese steelmaking company.

"The view from our strategic partner and customer of magnetite, Mr Cao Zhang, the assistant president of Shougang, is that demand for magnetite will continue," he said.

"The Chinese know it, they want it and they want more. It is a very strong endorsement."

"[So] we see the niche that a premium product such as ours can fill to replace diminishing natural lump, and we see Australia as well-positioned to continue to meet Chinese demand."

Caruso also said Balmoral South, with its key location in the Pilbara and the nearby massive CITIC development, was well-placed to sell its magnetite ore into the hungry market.

Balmoral South has an indicated resource of 744 million tonnes at 22.8% magnetite iron, with inferred resources standing at 372Mt at 22.5% magnetite iron.