ASX RELEASE
Tuesday, 3rd January 2012
KEY CONTRACTS IMMINENT FOR WORK TO START THIS MONTH ON NEW AUSTRALIAN IRON ORE MINE
Key infrastructure and mining contracts for Australia's
newest iron ore mine have been finalised for work to start
later this month on IronClad Mining's Wilcherry Hill project
in South Australia.
IronClad (ASX: IFE) announced today that preferred tenderers
had been notified and that formal contracts are about to be
signed for all infrastructure and mining activities through
to production and shipment of ore from the Wilcherry Hill
deposits near Kimba on SA's Eyre Peninsula.
The move to construction start-up follows the SA Government's
Christmas Eve announcement of formal approval for IronClad's
Program for Environmental Protection and Rehabilitation
(PEPR) - formerly known as the Mining and Rehabilitation Plan
(MARP) - the final statutory hurdle for the project.
In announcing IronClad's PEPR approval, South Australian
Mineral Resources and Energy Minister, Mr Tom Koutsantonis,
said the new mine would pave the way for the creation of 150
jobs and more than $340 million in investment in the
region.
IronClad Mining's Executive Chairman, Mr Ian Finch, said the
Company remained
on track to commence maiden production from the mine in the
current March quarter, with first product to be exported to
Chinese customers in the June quarter.
Mr Finch said the Company's strategy for awarding of various
contracts had, wherever possible, focused on local companies
for the Wilcherry Hill project. Now that the final statutory
approvals are to hand, the Company is able to finalise
contracts for work at Wilcherry Hill.
"We are focusing on the employment of local people in
order to enhance the project's connection with the
area's community while at the same time building a
reliable workforce," he said.
"As the second junior mining company to move into iron
ore production in SA in recent times, and the first from the
state's Eyre Peninsula region, our contracting strategy is
working well for IronClad and for South Australia's
expanding resources industry and the flow-on effect from that
upsurge.
"Years of planning and hard work are now only weeks away from
coming to fruition for our company."
The Wilcherry Hill iron ore project - an 80:20 Joint Venture
between IronClad and its associated company, Trafford
Resources Limited (ASX-TRF) - is on track to commence
shipments of Direct Shipping Ore (DSO) for sale to Chinese
steel mills in the second quarter of the 2012 calendar
year.
The first two years of production from Stage One of the
Wilcherry Hill project has already been sold to the Chinese
steel mills under a comprehensive sales contract and
marketing agreement.
Mr Finch said Stage One of the project involves production of
one million tonnes per annum
(Mt pa) of DSO for export to Asia, increasing up to 2 Mt pa
in the second year.
Stage Two involves an increase in production to 5 Mt of iron
ore concentrate per annum.
Stage Three includes the exploration and development of the
joint venture's separate Hercules Project, 15 kilometres
south east of Wilcherry Hill, which has an inferred JORC
classification of 198 Mt, and is expected to increase output
of the operation to 10-12 Mt pa by
2015.
Mr Finch said a feasibility study for Stage One of the
project established that, with an average iron ore price of
A$140 per tonne FOB (net of freight charges) into China and
initial operating costs of around A$85 per tonne, the project
would provide IronClad with strong margins of approximately
A$50 per tonne and an operating cash flow of around A$80
million per year at full production during the first stage.
IronClad has signed an agreement with Sea Transport
Development SA Pty Ltd (SEATS), the proponents of a port
facility at Lucky Bay, near Cowell, on South Australia's
Spencer Gulf.
The Company will use the unique facility to ship its iron ore
from a holding warehouse at the site to a unique floating
harbour about 5-10km offshore, which it is developing in
collaboration with Sea Transport.
At the commencement of Stage 2, Cape-sized vessels with a
capacity of up to 150,000 tonnes will then be loaded with
iron ore from the floating harbour.
"The multi-user bulk shipping port facility allows us,
initially, to transport our iron ore by road from Wilcherry
Hill to the Lucky Bay site, significantly reducing our
operating costs as a result of the shortened transport
distance proposed in our original plans," Mr Finch said.
"We had originally planned to transport our ore from the mine
via road to a site near Whyalla, where it was to be loaded
onto rail to Port Adelaide, before being transferred to
Panamax and small cape size vessels," he said.
"Our unique floating harbour concept reduces the land
transport distance from Wilcherry Hill to port from 520km to
only 154km - a significant saving in time, cost and economies
of scale."
Ian D. Finch
Executive Chairman
MEDIA CONTACT Sean Whittington Field Public Relations Ph: (08) 8234 9555 Mob: (0412) 591 520Competent Person
The information in this announcement that relates to results, is based on information compiled by Ian D. Finch, who is a Member of The Australasian Institute of Mining and Metallurgy and who has more than five years experience in the field of activity being reported on and is Executive Chairman of the Company.
Mr. Finch has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr. Finch consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
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