IRON - Scoping study completed for Fusion project

Centrex Metals has completed a scoping study at its Fusion magnetite iron project and associated nearby Port Spencer proposal on South Australia’s Eyre Peninsula. Both projects are joint ventures between Centrex and Wuhan Iron & Steel Corporation (WISCO).

The scoping study results have reassured Centrex that the two projects are prospective and a $45 million Definitive Feasibility Study (DFS) is now under way with an aim to further decrease risk and add value to commercial options. The DFS, which is expected to be completed in early 2013, is based on an annual production schedule of between 5 and 10 million tonnes.

The scoping study work indicates that on this assumed production exporting out of Port Spencer, Fusion will have estimated Free-On-Board (FOB) operating costs including royalties of between Aus$71 and Aus$65 a tonne and require estimated capital investment of between Aus$1.7 billion and Aus $2.6 billion.

Fusion is about 35km north of Port Lincoln at the southern end of the Eyre Peninsula. It is made up of several prospective magnetite deposits spanning a 50km anomalous magnetic BIF trend. Centrex wants to establish a centralized processing facility to access all deposits within the project area and transport ore 40km northeast via a slurry pipeline to Port Spencer for export.

Included in the scoping study are conceptual designs for mining and processing operations for the Koppio, Brennand and Kapperna deposits as well as a further mine life extension option over the Iron Mount deposit.

Centrex is continuing a 108,000 metre infill drill program to expand the resource base across the Fusion site.

The company’s 50:50 joint venture with WISCO for the development of a multi-user deep water cape-capable facility at Port Spencer was also included in the scoping study. The project includes construction of a 515 metre jetty and a ship loader with 5000 tonne per hour capacity, road works and power supply. Centrex says users of the port would provide their own dewatering and storage infrastructure.

The port financial estimates in the study did not include revenue generated by potential additional customers, however it is expected that other customers will utilize the port, including Centrex’s Bungalow JV with Baotou Iron and Steel Group, Centrex’s own Wilgerup hematite project as well as potential grain exports. The company’s chief operating officer Ben Hammond says any increase in export volumes through the port beyond Fusion will further enhance the investment returns.

www.centrexmetals.com.au