BC
Iron - The Time The Place The Metal
Poised
to become Australia's newest Iron Ore Producer in 2010
"With access to a rail line, (the juniors) have viable mines.
Without it they've got nothing"
James Wilson, analyst DJ Carmichael. Business Spectator, 28
October, 2009
The TIME
- Landmark
infrastructure JV agreement
in place with FMG: Provides end-to-end rail haulage and port operations ~
production to commence in 2010
-
US$50m project finance and
20Mt off-take deal secured with Hong Kong-based industrial and trading company
-
Fast-track production
strategy ~ start-up DSO operation of 3Mtpa via dedicated private haul road to
Christmas Creek expanding to +5Mtpa based on increased port capacity
-
Shift by steel mills to
high-quality iron ore products with low impurities of the type that BC Iron
will produce
- Feasibility Study confirms the economic and technical viability of the Nullagine Project
The PLACE
- 1,500km²
consolidated landholding in WA's iron-rich Pilbara region
- High-quality, low-cost operation with forecast operating costs
of approximately A$43/tonne over the life of the project
- Mine life of over 8 years with potential to be extended through
regional exploration and joint venture opportunities
- Capital project development costs of approximately A$43m, with
payback of capital expected to take less than 2 years from the start of
production
- Trial
mining confirms viability of low capital cost surface mining technique ~ primary
crushing not required
The METAL
-
Ore reserve of 36 million
tonnes at 56.9% Fe with a waste-to-ore ratio of 1:1
- Total
CID resource of 89.1Mt @
54.1% Fe (61.9% CaFe)
- BC Iron’s ore considered “first class” with low impurities and ultra-low Phosphorus
- Sintering
qualities greatly enhance
marketability of BC Iron's ore as a ‘Premium fines sinter feed
- No
beneficiation required -
simple mining, crushing and screening and transport operation
BC
Iron's competitive edge over other iron ore juniors in the Pilbara is that our
Nullagine resource comprises an outcropping, low contaminant ‘First Class' sinter
feed that is located close to accessible transport infrastructure. These
attributes position BC Iron favourably to rapidly transform the project into
production and cashflow.
Company Overview
BC Iron Limited (ASX: BCI) is an emerging iron ore producer
focused on Western Australia's world-class Pilbara region. The Company was
formed by combining the iron ore interests of Alkane Resources Ltd and
Consolidated Minerals Ltd - which are now both major shareholders in BC Iron.
BC Iron formalised a landmark JV (Nullagine
Joint Venture) with Fortescue Metals Group (FMG) in August 2009 and with a
US$50m financing and off-take arrangement recently secured with a Hong Kong
based Industrial Company, BC Iron is on track to become Australia's newest iron
ore producer in 2010.
Nullagine Project
The Company's core asset is the Nullagine Iron Ore Project, an extensive
tenement portfolio which is located 140km north of Newman in Western
Australia's Pilbara region and proximal to Fortescue Metals' Chichester operation.
The 100%-owned Nullagine Project currently hosts a Direct Shipping Ore (DSO) Reserve of 36
million tonnes at 56.9% Fe within a DSO resource of 50.7Mt at 57% Fe (64.8% CaFe) and an overall
Channel Iron Deposit (CID) resource of 89.1Mt @ 54.1%Fe. Importantly, the
resource occurs at surface, resulting in low stripping ratios, and is very low
in contaminants.
The Company completed a successful Scoping Study on a start-up DSO
operation at Nullagine and, on the strength of this, moved quickly into a Feasibility
Study. The Feasibility Study subsequently confirmed the technical and economic
viability of the Nullagine Project as a viable stand alone project.
BC Iron's pisolite ore is a low contaminant,
premium sinter blend giving the Nullagine Project the potential to deliver
strong cash operating margins at all stages of the commodity price cycle.
Nullagine Joint Venture (NJV)
In June 2009, BC Iron
Limited and Fortescue Metals Group (FMG) signed a landmark agreement that saw
the two companies establish a joint venture to develop BC Iron's Nullagine Iron
Ore Project.
The Nullagine Joint
Venture (NJV) will unlock the substantial value contained in the high-quality but
remote East Pilbara project and under the terms of the agreement, BC Iron and
Chichester Metals Pty Ltd (a wholly owned subsidiary of FMG), will each
contribute equity up to A$10 million to the project, with the remaining
development costs expected to be funded through project finance.
BC Iron will manage the NJV,
including responsibility for all operations, road haulage, marketing and ore
sales. FMG subsidiary, The Pilbara Infrastructure (TPI), will manage all rail
and port operations, taking product from the project stockpile at FMG's
Chichester operation to ships in Port Hedland.
The NJV will benefit
significantly from synergies arising from the proximity to FMG's operations,
including access to existing infrastructure, systems and facilities such as the
David Forrest airstrip, which will expedite the logistics of the new mine
development.
The Feasibility Study
results have provided BC Iron an excellent road-map for achieving its
production targets, starting at 3 million tonnes per annum next year and
ramping up to +5 million tonnes per annum based on increased port capacity at
Port Hedland..
The study is based on the known mineralisation at
the Bonnie Creek Channel Iron Deposit (CID), which includes the Outcamp,
Warrigal, Coongan, and Bonnie East Prospects.
Mine Development
BC Iron's estimated capital expenditure requirement for the mine
development is approximately A$43 million with a forecast operating cost of
approximately A$43/tonne. The operation is scheduled for commissioning in late
2010.
The proposed mining operation will be relatively simple and low-cost. In
particular, the outcropping nature of the resource will result in a low
waste-to-ore strip ratio of 1:1
The Company recently investigated innovative
mining techniques in the first phase of
trial mining at Nullagine, which was a key recommendation of the Nullagine Project Feasibility Study.
The results from trial mining have supported the key technical assumptions of
the Project, including the confirmation of surface mining and in-pit, portable
crushing as the preferred mining
method. This will allow highly selective mining.
Project Financing and Off-take
Agreement
An off-take and financing deal was signed with a Hong Kong based
industrial company in November 2009 which will see 20 million tonnes of iron
ore supplied over the next 8.5 years from the Nullagine Project.
The
agreement has also facilitated a US$50 financing arrangement which will be used
for project development, with the first tranche of US$15 million scheduled to
be drawn down in December this year and the rest spread throughout the first
half of 2010.
Iron ore pricing under the off-take agreements is related to the annual
benchmark iron ore reference price and if there is no benchmark in place, ore
will be priced according to a pre-agreed index system.
The agreements are consistent with BC Iron's goal
of securing off-take to underpin project finance and the establishment of
long-term relationships with its customers. The nature of the combined off-take
and project finance will enable the NJV to push ahead with development of the
Nullagine project, without the complexity that comes with conventional project
finance agreements.
Management
The Company's Directors have a wide range of technical and
corporate skills including a strong background in exploration, economic
assessment, and iron ore development and mining. Importantly, the Board also
has experience in exploration and assessment of CID mineralisation.
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