Metallurgical Corp of China (MCC) and Aurox Resources Sign Agreement for Balla Balla

AUSTRALIAN junior Aurox Resources says it has signed a binding but conditional deal with Metallurgical Corp of China (MCC) to construct the $1.8 billion Balla Balla magnetite (iron ore) project near Port Hedland and help Aurox secure Chinese debt funding.

It is understood Aurox expects any Chinese banks that provide funding to also take a stake in the project.

Yesterday, Aurox said MCC had signed a binding heads of agreement to provide engineering, procurement and construction services. This was conditional on MCC helping to find Chinese debt funding on suitable terms.

Aurox shares fell 1.5c to 31c yesterday on a generally positive day for iron ore miners.

The market may have been expecting more from Aurox, which had gone into a trading halt on Thursday pending a material agreement on Balla Balla. Aurox previously expected the project to cost $2bn, but a new estimate from MCC reduced this to $1.767bn.

The cost estimate was non-binding, Aurox said.

Under Aurox’s plan, Balla Balla is targeting 10 million tonnes a year of magnetite concentrate, with first production at a rate of 6 million tonnes a year from 2012.

The concentrate, which would have a grade of 57.7 per cent iron ore, would be piped 110km to Port Hedland.

From 2015, when iron ore production would ramp up to 10 million tonnes a year, the mine would also produce 7000 tonnes a year of ferro-vanadium at a grade of 80 per cent and 470,000 tonnes a year of ilmenite concentrate containing 45 per cent titanium dioxide.

Aurox has commitments to sell 6 million tonnes of magnetite a year to Chinese companies.

FLINDERS Mines has Increased the Delta Deposit resource

FLINDERS Mines has increased the resource at its Pilbara iron ore project by 39m tonnes and is on track to finish a prefeasibility study this year.

The Adelaide iron ore developer said it had increased the global resource at its project in northern Western Australia to 550 million tonnes at an average grade of 55.6 per cent iron.

“The gain has been driven solely by a 26 per cent increase, of 39 million tonnes, in the indicated and inferred resource for the flagship Delta deposit, the pivotal area for Flinders’ currently on-track mine prefeasibility study, due for completion in the fourth quarter of 2010,” the company said.

“The new estimate is the first indicated resource for Delta and the first for the whole project.

“At a 50 per cent iron cut-off, Delta now hosts an estimated indicated resource of 156.6 million tonnes (Mt) at 56.5 per cent iron and an inferred resource of 30.5Mt at 56.4 per cent iron, totalling 187.1Mt at 56.5 per cent iron.”

Under Australian reporting standards, indicated resources are those which have been measured at a greater level of confidence than inferred resources.

Flinders managing director Kevin Wills said the company was looking at various development options, including the possibility of producing direct shipping ore, which can be exported without being processed to higher grades.

“The results are generating a much clearer picture of the project’s different ore types, their quality and their distribution across the Delta deposit area,” Dr Wills said.

“Our confidence has also been boosted that the project is likely to contain a variety of mining options backed by evidence that in general, iron grades continue to increase and contaminant concentrations decrease towards the base of the deposit.

“We are scheduling additional drilling over calendar 2010 that will add further to the global resource but we are flexible with that so that the company can prioritise work that may be needed as part of prefeasibility study requirements.”

Dr Wills said the 2010 drilling campaign aimed to complete the indicated resource requirements at Delta, as well as pursuing new banded iron deposit targets and ore extensions outside the currently defined resource areas.

Aurox Secures EPC Contractor MCC Overseas LTD

Resources: 8-February-10 by Russell Quinn

Pilbara iron ore developer Aurox Resources has secured an agreement with China’s leading mining engineering services provider for the provision of engineering, procurement, and construction (EPC) services and assistance in financing its Balla Balla project.

MCC Overseas LTD, which Aurox said is one of the most experienced Chinese providers of EPC services in Australia having been involved in Sino Iron, Cape Lambert, and now the China First projects, has signed on to assist Aurox in securing debt finance from Chinese banking institutions as a condition of EPC.

Aurox managing director, Mr Charles Schaus said the time spent over the past two years advancing the Balla Balla project was instrumental in attracting such a high quality partner.

“Aurox is delighted that the quality of Balla Balla has been recognised by a leading Chinese multinational, and we look forward to working with MCC to bring Balla Balla to fruition,” Mr Schaus said in a statement.

“MCC has a strong track-record in delivering both quality EPC services and in assisting with the arranging of debt finance as we’ve seen with their other projects both in Australia and overseas. This is a very positive step towards the full financing and construction of the world-class Balla Balla project.”

“Today’s announcement also validates management’s view that the original cost estimates for the project could be significantly reduced, and also the value of having a strong EPC partner in China such as MCC.”

MCC and Aurox have agreed that Balla Balla must be financed in such a way as to have a superior long-term competitive advantage in order to meet its goal of becoming one of the most cost competitive suppliers of iron ore to China.

In November 2009 Aurox announced that it had completed its engineering and cost study for the two-phase development of the Balla Balla iron ore, vanadium and titanium project, stating it was undertaking an optimisation review of the capital estimate including exploring the use of alternative key equipment suppliers.

The agreement with MCC has confirmed Aurox’s view that the capital cost estimate could be significantly reduced.

As part of the agreement, MCC has provided Aurox with an EPC Proposal that provides an indicative non-binding EPC cost estimate to build the Balla Balla project.

Sandfire Resources Report Positive Drill results

Sandfire Resources gained more than five per cent today after reporting positive results from last year’s diamond drilling programme at the DeGrussa Copper-Gold Project, part of its wholly-owned Doolgunna Project in WA.

The company also announced the appointment of Martin Reed to the newly created position of project manager, to lead the development of the DeGrussa Project.

The entire 2009 drilling database, encompassing 88 diamond drill holes completed between early July 2009 and 22 December 2009, has now been forwarded to Coffey Mining Consultants to undertake a maiden JORC compliant resource estimate.

The calculation of the maiden JORC resource estimate currently underway, and on track for completion by mid-February 2010, will also be independently checked by McDonald Speijers.

The company said the results continue to reinforce the thickness and quality of the three high-grade VMS copper-gold lenses delineated at the DeGrussa Project – namely the DeGrussa, Conductor 1 and Conductor 4 lenses.

Western Area’s Forecasts Increased Earnings

Nickel producer Western Areas NL is tipping a turnaround in fortunes in its first half, after making a loss in the corresponding period a year earlier.

The Perth-based company expects a net profit of $10.7 million in six months to December 31, compared to a loss of $12.3 million in the same period in 2008.

The before tax profit for the period is likely to be $16.9 million compared to a loss of $16.3 million a year earlier.

Production during in the period is expected to be up nearly 38 per cent at 5,874 tonnes of concentrate.

In a statement, Western Areas said its December 2009 interim earnings were up due to increased sales at a better price, and access fees collected.

Gross revenue will likely be $107.3 million, up from $44.4 million in the same period of 2008.

Last week the company said its production for calendar 2009 was up on the previous year.

Western Areas said its dividend policy remained as 50 per cent of net profit.

Aurora Minerals Announces JV with Desert Energy Limited

Aurora Minerals Limited is pleased to announce that it is in discussions with Desert Energy Limited to enter a Joint Venture on Aurora’s large 100% owned Camel Hills Project in central Western Australia.

Under the proposed terms Aurora will grant Desert Energy the option to earn a 70% interest in the project by funding and conducting exploration. The proposed terms of the Camel Hills Joint Venture are set out below.

As shareholders will be aware Aurora Minerals owns 47 million (53%) of the shares on issue in Desert Energy.

The Company considers the deal a win-win for both parties.

The ground is highly prospective and Aurora would like to see Desert Energy have strong exploration success at this project to add substantial value to both 1) its Desert Energy shareholding and 2) its direct Camel Hills Joint Venture Interest, aimed at providing a significant additional increase to shareholder value.

The joint venture will provide Aurora with the ability to focus its attention on its large Capricorn Project where its high grade manganese discovery is going to have a very strong drilling focus and where preparation work for this is underway.

It is expected that final details of the proposed Camel Hills Joint Venture will be released to the market in the coming weeks.

The joint venture will be subject to the approval of shareholders of both Desert Energy and Aurora Minerals at general meetings of the two companies.

The Camel Hills Project covers the highly prospective northwest margin of the Archaean Yilgarn Block. Previous exploration has been limited to reconnaissance sampling for magnetite-iron, gold and copper-nickel which has yielded numerous anomalies and targets for follow-up and drill-testing.

The Camel Hills Project covers the highly prospective northwest margin of the Archaean Yilgarn Block. Previous exploration has been limited to reconnaissance sampling for magnetite-iron, gold and copper-nickel which has yielded numerous anomalies and targets for follow-up and drill-testing.

BC Iron Draws Down US$15M From Henghou Industries

A$96 million market-capped iron ore company BC Iron (ASX: BCI) reported today its Nullagine iron ore joint venture has received US$15 million, a second funding instalment from Henghou Industries of Hong Kong.

Nullagine is a joint venture between BC Iron 50% and Fortescue Metals (ASX: FMG). The payment is part of a US$50 million off-take, pre-sales agreement with Henghou.

Located in the world-class Pilbara region, Nullagine iron ore project is located 140km north of Newman – proximal to Fortescue Metals’ Chichester operation.

Total received to date by the joint venture partners is US$30M.

The funds will be applied towards project development activities, as Nullagine progresses toward production in the second half of 2010.

FMG will provide port and rail infrastructure access for the life of the mining operation.

Current Direct Shipping Ore Probable Reserve at Nullagine iron project is 36Mt @ 57% Iron (Fe). The total mineral resource at Nullagine is 89Mt @ 54.1% Fe.

Competitive advantage that BC Iron has is that the Nullagine DSO comprises an outcropping, low contaminant “first grade” sinter feed, which is sought after by steel producers.

Western Areas Nickel Production Up

Shares in Western Areas rose after the nickel miner said it had exceeded its calendar 2009 production target and made a strong start to 2010.

The company said in a statement today it produced 244,367 tonnes at 3.8 per cent nickel containing 9,193 tonnes of nickel at its Flying Fox mine in Western Australia last year.

This compares to its output target of 240,000 tonnes at 3.8 per cent nickel containing more than 9,000 tonnes of nickel.

The average cash cost was higher than hoped, however, at $US2.54 per pound against its target of $US2.50 a pound.

Western Areas said production in January was 22,200 tonnes at 3.9 per cent nickel containing 874 tonnes of nickel, up from its previously announced target of 730 tonnes of nickel per month during the March quarter.

The company said shareholders had queried its mining of lower grades – 3.3 per cent nickel – during the December quarter.

Western Areas said this was due to a period of substantial operating waste and ore development to access the lower T4 and upper T5 ore bodies at Flying Fox.

The company said it was now ramping up production from the T5 ore body.

First ore from its second long-life high-grade mine, Spotted Quoll, is due in April while an underground ore reserve is due in the June quarter.

Capacity is being doubled at its Cosmic Boy processing plant to meet expanded production from Flying Fox and Spotted Quoll.

Apex Extend Golden Age Mineralization

Australian gold producer Apex Minerals (ASX: AXM) has delivered immediate success from its new exploration program at the Wiluna Gold Project in Western Australia.

The company announced drilling has identified the extension of the Golden Age mineralisation located to the east of the previous mining area.

The Golden Age mineralisation is free milling and is close to existing underground development, with the mineralised zone open up and down-dip and to the east.

During the afternoon trade, shares in Apex jumped 17% to 3.4c.

The current drilling program is aimed at identifying near-term mining opportunities.

The first six holes drilled into this target have returned extremely encouraging results with the quartz reef being intersected in all of the holes with three (AWD 0400, 0402 and 0403) containing visible gold within the reef interval.

The assay result from the first of these three holes returned 6.9m @ 39.4g/t gold (est. 2.5m true width) from 191.5m in AWD0402.

Further information will be released to the market as appropriate.

Apex Managing Director Mark Ashley said the results were highly promising.

“This initial drilling program, which only commenced in early January, confirms the presence of an exciting new extension of the Golden Age deposit at Wiluna,” he said.

“This Golden Age extension is under explored, free milling, high grade, close to existing development and has the potential to make a significant additional contribution to production and profitability.

“Exploration has effectively been on hold since development and subsequent production at Wiluna commenced in late 2008 so it is extremely encouraging to have such early success in one of many exploration targets that have been identified and assessed over the past 12 months.”

He said the company’s initial focus on Golden Age reflects it’s near term mining potential and low cost drilling rather than it necessarily being the best exploration target identified to date.

“Apex expects to expand its exploration program to test its numerous other targets once financially prudent to do so,” Mr Ashley said.

Gindalbie and Sinosteel Midwest to Share Infrastructure

ASX-listed iron-ore miner Gindalbie has signed a cooperation agreement with Sinosteel Midwest providing a framework for sharing access to infrastructure and mine services for their neighbouring projects in Western Australia.

The agreement would enhance project economics and unlock synergies between the Karara project and Sinosteel’s nearby Koolanooka/Blue Hills project, Gindalbie said on Monday.

The agreement includes key items such as spur line rail access, use of on-site accommodation facilities, shared access to the new Karara airstrip, water infrastructure and sharing of environmental data.

The miner said that both groups would gain mutual benefits from the arrangement, which would reduce capital costs and lead to lower operating costs through economies of scale, especially in relation to ore transport.

Avoiding the duplication of infrastructure would also reduce the size of the combined projects’ overall environmental footprint and the level of vegetation clearing required.

In a joint statement, Gindalbie’s MD Garret Dixon and Sinosteel Midwest’s COO Giulio Casello said that they believed the agreement represented a “genuine win-win for both groups”

Source: JOHANNESBURG (miningweekly.com)