MAILING LIST  

Mt Forrest (Fe, Au)

MT FORREST PROJECT

In October, Mindax signed a JV agreement with Hong Kong-based Perpetual Mining Holding Limited securing. Mt Forrest's future and fast tracking to production. The Mt Forrest Iron Project comprises seven mining leases and is located 165 km from the southbound railway at Menzies and around 648 km from the port at Esperance.

Mindax has discovered and built a significant iron ore inventory in beneficiated magnetite and DSO materials. The current primary magnetite JORC Mineral Resource stands at 1.71 billion tonnes @ 31.8% Fe (248.2 Mt @ 32.6% Fe Indicated and 1,462.4 Mt @ 31.6% Fe Inferred). Recoveries from extensive Davis Tube Recovery (DTR) analysis are in the range 35-40% by weight and concentrate iron grades are of the order of 66-70% Fe, 2.5-7% SiO2. Primary grades of greater than 50% Fe have been encountered with the strong presence of micro-platey hematite. The Mt Forrest iron inventory has the potential to sustain steel feed over a thirty (30) year time frame.

The Company has completed an updated scoping study for the development of a mining business at Mt Forrest. The study has been carried out to normal industry standards and aims to achieve an accuracy of +/- 30 per cent. It is substantially based on resources of an inferred JORC status. The key points of the study are:

  • Potentially very positive project for a beneficiated DSO product.
  • The DSO Regolith option is based on production of 2Mtpa of beneficiated hematite-goethite product over approximately a 5 year mine life.
  • The DSO mining will expose magnetite which will potentially allow a later, larger scale magentite operation.

Work on a Feasability Study is continuing to advance resource status, mine planning, product processing and transport aspects. The emphasis is presently on establishing a Direct Shipping Ore operation on the enriched near surface materials to create an early cash flow with targeted first production in 2015.

Mt Forrest Target areasThe current  JORC regolith resource reporting above 40% Fe cutoff stands at 27.1 Mt @ 44.0% Fe (12.3 Mt Indicated @ 45.5% and 14.8 Mt Inferred @ 42.7%). Mindax has identified additional regolith exploration targets. Drilling to date comprises 674 holes for an aggregate 41,375m since commencement in December 2009.  Early metallurgical work has confirmed that where necessary, this material appears amenable to beneficiation. Resource delineation will increase the resource confidence for the Mineral Resource inventory and target newly accessible areas of mapped goethitic material and the up-dip projections of high-grade (>45% Fe) magnetite mineralisation.

In addition to resource delineation work, the company has been granted Miscellaneous Licences to allow identification of water resources for an eventual operation and for a magnetite slurry pipeline facility to Menzies on the present rail link to Esperance. Preliminary engineering and hydrology studies of these licences have been undertaken. Drill core has been obtained from the resource for metallurgical testing, engineering logging and petrological studies.

Discussions are continuing with a range of technical services and infrastructure providers, including the Port of Esperance, above and below rail providers, environmental consultants, and metallurgical advisors. Meetings were held with the aboriginal heritage groups and the registered native title applicant as part of the ongoing Aboriginal Heritage Management Program.

Updated Scoping Study

The Updated Scoping Study (UStudy) referred to in this report is based on low-level technical and economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised.

The focus of the new work has been to take a holistic approach to the Mt Forrest Iron Project, with detailed emphasis on the initial DSO phase. A more substantial first phase DSO project has been determined by inclusion of detrital iron resource which was established during 2013. The DSO project is viable in its own right as a stand-alone project, but has also been planned such that an easy transition to magnetite mining could follow. The DSO project will uncover large sections of magnetite resource ready for mining. Initial mine infrastructure and equipment will be selected wherever possible and sited such that it can be used for magnetite mining when DSO mining is completed. This reduces capital and operating costs and minimises the operations footprint.

Initial DSO Project Phase - Overview

The overall scope of this phase is now planned as follows:

1) Production of 2Mt per annum of final product 60% Iron concentrate for a 5 year period.

2) Road haul to Menzies via purpose built single lane private haul road.

3) Rail transport from Menzies to Esperance.

4) Product export from expanded Esperance Port.

5) Total product cash costs FOB Esperance A$85/tonne.

6) Investment Cost, (including Feasibility Study (FS) and mine development including Build Own Operate (BOO) or Build Own Operate and Transfer (BOOT) items), of A$177M.

7) Focus on reducing own initial capital costs by a series of BOO and BOOT commercial contracts for mine site plant operations and major infrastructure.

 Mine start up mid 2015 which is generally consistent with the published expansion timeframe for the Esperance Port.

Mineral Resource Update

Updated resource modeling was carried out during the year by independent geological consultants Optiro for the regolith iron
mineralisation and the underlying magnetite mineralisation.

The revised mineral resource of regolith iron mineralisation, above a 40% cut-off, was estimated to be 14.7 million tonnes at 45.4%
Fe (Indicated and Inferred Mineral Resource classification). Table 2 summarises the regolith iron resource at a 40% Fe cut-off, as
reported by Optiro.

Table 1: July 2012 Mt Forrest Iron Mineral Resource Regolith Mineralisation at a 40% Fe Cut-Off

Regolith iron metallurgical work was conducted by Ammtec Ltd under the management of Vulcan Technologies Pty Ltd. Results from this metallurgical testwork program on three representative Mt Forrest regolith iron samples above a 40% Fe cut-off returned product grades of up to 63% Fe with mass recoveries greater than 70%, along with low levels of gangue mineralogy. These results have provided confidence that the
lower grade material (the abovementioned 14.7Mt @ 45.3% Fe) can generate a marketable product significantly adding value to the project overall.

Three representative Regolith composites were generated for testing comprising:

  • Sample 1 – 40 - 50% Fe range.
  • Sample 2 – 50 - 60% Fe range.
  • Sample 3 – 50 - 60% Fe range with internal dilution.

The testwork included gravity, magnetic and density separation processes with density separation at -3mm (no grinding is necessary) showing the best upgrade and mass recovery. Key points from the testwork are:

  • Up to 28% Fe upgrade for sample 1 where the average head grade at 45% Fe increased to 58% Fe with a mass recovery of 63%.
  • Up to 73% reduction in silica and 79% reduction in alumina levels were achieved in sample 1.
  • Samples 2 and 3 saw modest upgrades in iron by up to 14% from average grade >55% Fe to 63% Fe with low impurity levels reporting to 2.2% alumina and 4.8% silica and low levels of phosphorous at 0.07%. The mass recoveries for both samples exceeded 70% and sample B2 up to an outstanding 82%.

Further test work will be carried out during the feasibility studies.

With the positive metallurgical testwork results, there is a considerable amount of untested strike potential as well as additional new strike potential of previously drilled lower grade mineralisation that can potentially add further tonnage to the mineral resource inventory. Further drilling is proposed to ensure the ongoing growth of the Mt Forrest resource base.

Regolith Detrital Materials

Mindax requested Optiro Pty Ltd (Optiro) of West Perth to generate a Mineral Resource estimate for the detrital iron. Optiro has estimated the Inferred Mineral Resource for the detrital iron mineralisation at the Mt Forrest Project to be 24.0 Mt at 40.3% Fe reported above a 35% Fe cut-off grade and 12.4 Mt at 42.3% Fe reported above a 40% Fe cut-off grade. The Mineral Resource has been reported and classified using the guidelines of the 2004 JORC Code.

Key Points:

• The September 2013 Mineral Resource is based on 258 RC drill holes (including 10 legacy holes) for a total of 4,064m of drilling.

• Digital wireframes were generated by Mindax geologists for the areas outlined in Tables 1 and 2 and Optiro created individual volume models.

• The Inferred Mineral Resource included recent assay information for previous RC Drilling and the interpreted lenses were modelled up to 50 metres along strike from the drilling.

• The Mineral Resource was estimated using ordinary block kriging. A dry density of 2.8 was used for the estimation, based on hydrostatic density determination on drill core samples.

    Metallurgy

    Drill core samples representing the detrital iron mineralisation ranging between 36% - 49% Fe, were chosen for the initial assessment. These samples were characterised using Heavy Liquid Separation (HLS) at P100 1mm. This preliminary testwork indicated that a 58% to 60% Fe product could be produced.  Initial mass recoveries range from 18% to 54% and the metallurgical programme is ongoing, with the aim being to optimise the beneficiation route for the detrital material.

Mt Forrest Magnetite Mineral Resource Consolidation

The magnetite mineral resource was also upgraded during the year to 1.7 billion tonnes of a head Fe grade of 31.8% (JORC Indicated and Inferred Mineral Resource classification, see Table 2 below).

A decision was made during the year to consolidate the resource models for the magnetite mineralisation for future modelling. Optiro had undertaken recent resource estimates for the Company for the regolith and magnetite mineralisation, as detailed in announcements lodged on 22 November 2011 and 2 December 2011. The 22 November 2011 mineral resource announcement also included data from the magnetite mineralisation model prepared by CSA Global Ltd (“CSA”). A review of this model by Optiro against resource drilling has found that the model performs appropriately at its Inferred resource classification and the estimated grades are considered to be extrapolated.

The consolidation of the resource models undertaken by Optiro allows for more streamlined reporting of the magnetite resource going forward. As part of the consolidation of the CSA magnetite resource model the following changes were made to the model by Optiro, so as to bring it into line the methodology adopted by Optiro in their current magnetite resource model:

  • density changed to 3.5 from 3.3; and
  • reported the magnetite mineralisation down to the 300m RL. Previously this had been reported over a range of depths.

Table 2 summarises the reported consolidated magnetite resource at a 25% Fe cut-off, noting that approximately 75% of the Inferred Resource should be considered as extrapolated.

Table 2: July 2012 Mt Forrest Iron Consolidated Mineral Resource Magnetite Mineralisation at a 25% Fe Cut-Off
 

Davis Tube Recovery Results at 40 Micron including High Tenor Magnetite

Extensive Davis Tube Recoveries (“DTR”) testwork was carried out through the Mt Forrest project area. Some 930 analyses have been completed to establish the variation within the magnetite resource. This allows differentiation of prospects as far as likely concentrates are concerned. It also contributes significantly to the geological knowledge of what is a significant mineralised system.

Drill hole MFC0303 intersected several high-grade zones, with primary grades up to 49% Fe and weight recoveries up to 60%, averaging 70.8% Fe over 100 metres and presenting an ultraclean concentrate with very low contaminants. A best weight recovery of 62.3% with a concentrate grade of 71.1% Fe indicates an ultra-clean magnetite specification. Analysis of selected DTR tails confirmed certain mineralisation includes a hematite component potentially enhancing overall Fe recoveries.

An average head grade of 37.5% Fe returns an average weight recovery of 35.6% and a concentrate of 68.8% Fe and 4.8% SiO2. Phosphorus, Alumina and Sulphur are all very low and indicate a high quality product can be achieved.

Mt Forrest Gold Update

Significant gold anomalism has been confirmed along the western limb of the Mt Richardson syncline, especially at the Toucan and Jason’s Find/Macaw prospects. This work has been carried out on the principle that the area is known to include significant gold mineralisation at Paradise Bore and that there is wider gold prospectivity. It is important to further quantify that knowledge to ensure full value is achieved from earthmoving activities when iron mining commences.

First pass gold assays from bulk composite samples have been returned and the assays have extended gold mineralisation along strike in areas previously tested for gold. This additional new mineralisation confirms the significance of potentially economic gold at these prospects at Mt Forrest. Composites (10 metres) were generated from pulp material used from the iron ore RC drilling undertaken from December 2009 to February 2011.

A total of 2,727 samples were submitted and 134 samples returned a gold value >0.1g/t Au. A total of 28 samples returned values >0.5g/t Au including a best intercept from hole MFC220 returning 10m @ 2.18g/t from 30m.

Gold mineralisation was first discovered in the early 1990’s as small narrow discontinuous concentrations located near surface and at depth in narrow quartz veins hosted within quartz magnetite banded iron formations. In places significant quantities of higher grade gold mineralisation makes up sub-economic quantities. Sipa NL has previously released a JORC mineral resource (inferred) for the Paradise Bore prospect of 400,000t @ 2.8g/t Au for 36,000 ounces. Desktop studies identified the potential for gold to be mined along with the iron within the potential footprint of a conceptual iron pit. The oxidised gold resides within the iron contacts and mafic waste material. This prompted the exercise of assaying all iron drilling that was previously assayed for iron.

These latest gold assays continue to support surface geochemical gold anomalies and drill intercepts previously identified by Sipa NL. This gold mineralisation is primarily concentrated along the western limb at Jason’s Find, Paradise Bore and Toucan. Gold assays have been extended to drill holes on both fold limbs. A significant anomaly has now been identified on the western side.

RC and Diamond Drilling at Toucan have recognised stringy quartz veins hosted by mafic saprolite and oxidised cherty BIF. The higher grade gold assays are generally associated with 1-5 metre thick quartz veins caused by hydrothermal alteration and fluid remobilisation along lithological contacts and fractures.

Gold assays from Jason’s Find and Macaw confirmed the mineralisation is hosted at surface within laterised gravels, as supergene enrichment in the oxide zone and the primary mafic and banded iron units at depth. Four recent magnetite holes (MFC0333 – MFC0336) were assayed for gold and returned anomalous values >500ppb as deep as 250 metres downhole. A previous Sipa hole BNC2 returned gold values up to 3.0 g/t. MFC0335 and MFC0336 returned anomalous gold beneath BNC2 indicating that mineralisation continues at depth. The latest results indicate there may be potential for high grade gold lodes >10g/t at depth based upon previous drilling in this area.

One metre composites have been collected and sample prepared awaiting assay. The gold assays will be interpreted and additional drilling and resource modeling will then be undertaken to generate a new gold resource.

Mindax has maintained a strong and successful relationship with the various cultural heritage and environment stakeholder groups by ongoing consultation and involvement. An environmental management plan is in place and there is frequent interaction with Department of Environment and Conservation personnel.

The Mt Forrest project initially came into the Mindax portfolio as a gold project including a small gold resource at Paradise Bore. Gold anomalism supported by scout drilling intercepts outlines 10 km of exploration potential along the western limb of the Mt Forrest fold. A check assay program on iron drilling sample was carried out in parallel to the iron program. This identified several significant intervals including 2.18 g/t over 10 metres from 30 metres down hole in MFC220. This program will be extended through selected drill holes with a view to identifying any significant gold mineralisation, particularly gold that may need to be moved in the pre-stripping of future iron pits.

 

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