Stewart Watkins, IMX Resources: Reviewing the Mt Woods Magnetite Project and the Challenges of...
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Transcript of Stewart Watkins, IMX Resources: Reviewing the Mt Woods Magnetite Project and the Challenges of...
Mt Woods Magnetite Project
FeTech 2013 26 November 2013
I r r a w a d d y
Ntaka Hill (within Nachingwea) Ownership: 100% IMX*
Minerals: Ni, Cu
Stage: Exploration / Feasibility
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IMX Resources
* Subject to IMX / MMG Joint Venture Terms
Nachingwea Ownership: 100% IMX*
Minerals: Ni, Au, Cu
Stage: Exploration
Mt Woods Magnetite Ownership: 100% IMX
Minerals: Fe
Stage: Exploration / Feasibility
Cairn Hill Ownership: 51% IMX
Minerals: Fe, Cu
Stage: Producing
Mt Woods Copper-Gold Ownership: 100% IMX
Minerals: Cu-Au
Stage: Exploration
Q3 CY12 Q4 CY12 Q1 CY13 Q2 CY13 Q3 CY13
Waste (MBCM) 0.65 0.38 0.31 0.28 0.57
Waste & Ore (MBCM) 0.76 0.48 0.40 0.38 0.67
Ore Mined (Mt) 0.46 0.44 0.40 0.44 0.41
Ore Shipped (Mt) 0.46 0.39 0.46 0.46 0.45
Free Cash Flow (A$m) 4.7 6.2 13.4 21.3 3.7
Av. Price (US$/dmt)* 113 122 148 124 111
Cairn Hill Mine
First new iron ore producer in 100 years in South Australia
JV operated by IMX (51%), Taifeng (49%)
Cash flow positive and stable operation, good safety record, low staff turnover
1.8 Mtpa production of DSO coarse-grained Fe-Cu product expected for another 15 months
Established relationships with suppliers and the community – winner of Large Business Award in 2012 Regional SA Business Awards and 2013 SA Export Award
Opportunity for life extension through beneficiation of additional Phase 2 resources
Developed for pre-production capital of only A$11M
Production Statistics (100% Basis)
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* 62% Platts CIF, main component of price received by IMX.
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Cairn Hill Development Fundamentals
Mining and Crushing
Contract mining operation typical for smaller mining companies
Mobile, self powered crushing on a contract basis
No capital other than pre-stripping and earthworks
Haulage and Rail
Low cost private road to rail siding and contract haulage in 200t road trains
Second hand rail equipment
Leasing of wagons and containers to remove capital
Port
Development of ‘Rotainer’ system that is now the standard solution for mineral concentrate
Minimal infrastructure required at Port Adelaide
Key Partners
Exact Mining Services, SCT Logistics, Flinders Ports
Rail Siding and Loading Facility Train Line Port Adelaide Ship Loading
Cairn Hill’s Legacy
Proven logistics solution from mine to customer
Key contractors for Mining, Rail and Port
Close relationships with the local community of Coober Pedy
Highly effective native title agreement with local traditional owners
Site infrastructure that can be utilised for Mt Woods
Baseline environmental data for the local area
Operating team that worked through the development of Cairn Hill including permitting and contract negotiation
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Mt Woods Project Overview
Ore (Mt) % Fe % Al2O3 % P % SiO2 % S Cont. Fe (Mt)
568.9 27.11% 6.83% 0.13% 45.70% 0.03% 154.2
Snaefell Inferred Resource Estimate
(At 18% Cut-Off)
100% owned by IMX
Approximately 700km NW of Adelaide and
50km from Coober Pedy
Defined Inferred Resource at Snaefell, 12
km SW of Cairn Hill of 569Mt @ 27.1% Fe,
open along strike
Exploration targets totalling a further 900
to 1,200Mt @ 18 – 32% Fe
The Problem with Magnetite Projects
All bulk product projects need access to rail and port solutions to get product to market
Magnetite also needs processing and beneficiation so therefore needs power and water
Majority of projects lack some or all of these key pieces of infrastructure which vastly increases capital burden
In order to get a suitable return on capital project scale increases further increasing capital for mining and processing
Costs always end in the word “Billion”
Project delivery complexity as it is now a multi headed project hydra with up to 5 major projects in one
Inevitable blowouts of cost and time result
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Conceptualising Mt Woods
Initially IMX considered a “typical” magnetite project of up to 9.4 Mtpa with to achieve economies of scale – This meant:
Rail spur into site at A$3M/km
New port solution to achieve capacity and utilise Capesize vessels
Long distance power transmission or generation
But…..
Could continue on from Cairn Hill exporting 1.8 Mtpa of product with ZERO capital for logistics
Continue in containers on standard rail wagons
Port Adelaide storage in containers and using Rotainer onto Panamax vessels
Smaller production also lowers power requirement so there is a possibility of accessing power from Prominent Hill
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Mt Woods Infrastructure
Rail
Rail siding at Rankin Dam, 50km from Snaefell deposit
850km to Port Adelaide which can support up to 3.5 Mtpa on current train paths
Opportunity to improve rail efficiency over current operations
Port
Proven innovative port solution developed with Flinders Ports
Opportunity to develop scalable port options at Port Adelaide and improve efficiency
Longer term opportunity to port and shipping efficiency and reduce costs
Power
Grid sourced power feeding the OZ Minerals Prominent Hill mine 60km the the south-east
via BHP Billiton’s Olympic Dam mine
Preliminary investigations indicate sufficient power, available conditional on agreement with
OZ Minerals and BHP Billiton, to support up to 3.5 Mtpa production
Rail Siding and Loading Facility Train Line Port Adelaide Ship Loading
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Mt Woods Metallurgy
Low processing complexity and ramp up risk
Coarse grind (P80 80μm)
Simple beneficiation process
Low overall cost operation
Low capital cost
Reduced risk of cost escalation
High level of operating cost certainty
Quality product specifications and optionality
Premium grade, high quality product with
low impurities (68.5% Fe, 3% SiO2)
Range of products able to be produced from
same flow sheet
Mt Woods Base Case
Mining at a LOM strip ratio of 1:1 up to 10 Mtpa of ore and feeding into a conventional crushing circuit
Simple processing with a LOM average yield of 27%
Hydraulic transfer of product from minesite to rail siding (significant Opex savings over trucking)
Power supply by connection to Prominent Hill – Grid generated power
Water supply from groundwater with washing of product with desalinated water
Small extension to Rankin Dam siding to accommodate 1.8km long trains
Rail of product to Port Adelaide in containers and storage in containers at the port
Loading of product into Panamax vessels using Rotainer system
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Mt Woods Scoping Study
Low Capital Cost
Infrastructure, metallurgy and simple processing give opportunity for smaller scale
development
Scoping Study base case of 2.5 Mtpa production based on proven logistics solution
Opportunities for up to 3.5 Mtpa with optimised logistics
Capital cost potentially between $300M and $400M
Competitive Operating Costs
LOM strip ratio only 1:1
Low power costs from primary coarse separation, coarse grind and grid generated power
Potential base case FOB operating costs of A$77/t, but with optimised logistics expected
reductions of more than A$5/t
Costs competitive with domestic Chinese production on a US$/t basis landed in China
Premium Product
68.5% Fe product with approx. 3% SiO2, no other significant impurities
Options for lower grade, coarser product at reduced operating costs
Sound Economic Returns
Mt Woods is an economically attractive, lower risk, near term project opportunity
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Capital Intensity Benchmarking
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Capital Intensity (US$/t): Capital Expenditure (US$m)1 / Production Rate (Mtpa)
Mt Woods has a low capital intensity when compared with peers on all production cases, due
to the existing infrastructure and simple metallurgy.
* Pig iron project.
1. Assumes an exchange rate of 0.85 AUD:USD.
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Mt Woods Scoping Study – Believable?
Operating Costs
Mining unit costs from current mining contractor
Rail haulage costs built up from current access charges, current rolling stock lease costs,
current container costs, current haulage rates
Port costs from current port operator for identical operations
Shipping costs from current vessel charter costs
G & A costs from current operations
Over 80% of CFR operating costs based on current operations
Capital Costs
Mining pre-strip unit rates from current mining contractor
Geotechnical parameters from existing pit
Rail siding extension costs from engineer who developed the original siding
Re-use of significant parts of Cairn Hill infrastructure such as offices, fuel storage,
accommodation camp etc.
Result
Accuracy of the scoping study is determined by the resource confidence, metallurgical
test work, geotechnical and other assumptions rather than estimating accuracy
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Mt Woods Deliverability
Low funding requirement
Low funding requirement for smaller scale project with ability to scale up with modular
construction
Easier to finance both equity and debt
Proven team, good jurisdiction and existing contracts
Proven development & operating team from Cairn Hill mine is still with IMX
Existing contracts and relationships in place with service providers and regulators
South Australia is a development focused jurisdiction
Working with DMITRE through “Case Manager” program to streamline and expedite
approvals process
Development scale and product optionality
Multiple production scale and product type alternatives provide optionality and increase
marketability
Not five projects in one but a conventional mining and processing project with minor
infrastructure
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Mt Woods Upside Opportunities
Reducing Operating Costs through Optimised Logistics
Use of bottom dump rail solution over current container solution to optimise rail costs
Optimising port handling operations to increase loading rates and reduce costs
Staged Development
Possible start up at 1.8 Mtpa with single train consist
Expansion through modular addition of processing line and additional train consist
Additional Resources at Mt Woods
Current exploration targets have the potential to add 900 – 1,200 Mt at 18 – 32% Fe
Opportunity for a cluster of projects sharing synergies around infrastructure
Catalyst for SA Iron Ore Opportunities
Potential to bring together similar smaller scale projects and share synergies
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Mt Woods Key Differences
Or – Why isn't Mt Woods like every other magnetite project….
Mt Woods uses existing Rail, Port and Power infrastructure
Mt Woods has simple coarse grained metallurgy which gives simple and
low cost processing
IMX has the knowledge and team to deliver the Mt Woods project gained
through the successful development and operation of our Cairn Hill Mine
This provides….
Low capital cost & low capital per tonne of production
Low technical and commercial risk
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Mt Woods Next Steps
Currently seeking development partner to fund feasibility studies through
to a development decision
Asian steel mills
Private equity investors
Existing producers looking to supplement production
Targeting partner selection in the first half of 2014
Committing to limited activities to de-risk or address critical path
Heritage clearance of planned drilling
Spring environmental survey
Power, rail and port discussions
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Conclusions
Magnetite industry, particularly in Australia, needs to work hard to
overcome the stigma of some high profile underperformers
Logistics and infrastructure solutions that are already in place or require
minimal development will allow the effective development of smaller
scale projects that greatly reduce the investment risk
Projects with mineralisation more akin to Chinese or North American
projects (coarse grained) will greatly reduce technical risk
Proven development teams provide comfort to investors that what is
promised is delivered
Mt Woods provides all these key points and represents the style of project
that is the future of magnetite in Australia
Forward Looking Statements
This presentation includes certain “forward‐looking statements”. Forward-looking statements and forward-looking information are frequently characterised by words such as “plan,” “expect,” “project,” “intend,” “believe,” “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may”, “will” or “could” occur. All statements other than statements of historical fact included in this presentation are forward‐looking statements or constitute forward-looking information. Such statements and information in this presentation include, but are not limited to statements regarding mining parameters (including processing rates and processing plant feed), iron concentrate production, estimates of capital costs and operating costs, internal rates of return, net present values, availability and development of infrastructure, life of mine estimates, annual mining and production estimates and targets and revenue related assumptions such as iron ore prices and exchange rates. There can be no assurance that such information or statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such information. Important factors could cause actual results to differ materially from IMX’s expectations.
These forward-looking statements are based on certain assumptions, the opinions and estimates of management and QPs/CPs at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements or information. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal prices, the possibility of project cost overruns or unanticipated costs and expenses, the ability of contracted parties (including laboratories and drill companies to provide services as contracted), limited, constrained or unavailable infrastructure (including rail lines and port and shipping availability), uncertainties relating to the availability and costs of financing needed in the future and other factors. Exploration target tonnage quantity and grades estimates are conceptual in nature only. These figures are not resource estimates as defined by the JORC (2004) or NI 43-101, as insufficient exploration has been conducted to define a Mineral Resource and it is uncertain if further exploration will result in the target being delineated as a Mineral Resource. Mineral resources that are not Mineral Reserves do not have demonstrated economic viability. There is no certainty that the analysis and outcomes presented below will be realised and the reader is cautioned not to place undue reliance on forward-looking statements or information.
IMX undertakes no obligation to update forward-looking statements or information if circumstances should change. The reader is cautioned not to place undue reliance on forward-looking statements or information. Readers are also cautioned to review the risk factors identified by IMX in its regulatory filings made from time to time with the ASX, TSX and applicable Canadian securities regulators.
Competent Persons Consents / NI 43-101 Statements
Information relating to Australian exploration results is based on data compiled by Mr Peter Hill who is a Member of the Australian Institute of Geoscientists, and who is a full-time employee of IMX Resources Limited (“IMX”) or the “Company”). Mr Hill has sufficient relevant experience to qualify as a Competent Person (“CP”) under the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and as a Qualified Person (“QP”) as defined in Canadian National Instrument 43-101 (Standards of Disclosure for Mineral Projects). Mr Hill approves and consents to the inclusion of the data in the form and context in which it appears.
Information that relates to the estimation of the Inferred Mineral Resource at Snaefell is based on information compiled by Mr Kevin Lowe and Mrs Vanessa O’Toole and reviewed by Mr Trevor Stevenson and supervised by Ms Bianco Manzi, who at the time was a full time employee of IMX and a member of the Australian Institute of Geoscientists. Mr Lowe is a Member of the Australasian Institute of Mining and Metallurgy and Mr Stevenson is a Fellow of the Australasian Institute of Mining and Metallurgy. Both Mr Lowe and Mr Stevenson are full time employees of Runge Limited and have sufficient relevant experience to qualify as CPs and QPs. Mr Lowe and Mr Stevenson approve and consent to the inclusion of the data in the form and context in which it appears.
The quality control and technical information compiled for the Mt Woods Scoping Study was prepared by the following QPs/CPs: Alistair Stevenson of Runge Pincock Minarco who is a Fellow of the Australasian Institute of Mining and Metallurgy; Trevor Mcllwaine of Xstract Mining Consultants who is a Professional Engineer; Neville Dowson of Engenium Pty Ltd who is a Fellow of the Australasian Institute of Mining and Metallurgy; and Jeames McKibben who is a Member of the Australasian Institute of Mining and Metallurgy. Each of these QPs/CPs have reviewed this news release and approve and consent to the inclusion of the data in the form and context in which it appears. ``
Mineral resources have been estimated using the Australian JORC (2004) Code, which is a permitted code under Canadian National Instrument 43-101, in addition to the CIM Definition Standards on Mineral Resources and Mineral Reserves. Mineral resource classifications under the two reporting codes are recognised as equivalent in categories with no material differences.
Cautionary statement The information in this presentation is published to inform you about IMX. To the extent permitted by law, the Company accepts no responsibility or liability for any losses or damages of any kind arising out of the use of any information contained in this presentation. Recipients should make their own enquiries in relation to any investment decisions. Certain information in this presentation is based on low-level technical and economic assessments and is insufficient to support estimation of Ore (Mineral) Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the PEA will be realised.
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