SHERLOCK BAY NICKEL PROJECT
The Sherlock Bay Extended project is located in the Pilbara region of Western Australia. The Project has an estimated Mineral Resource 25.4 Million tonnes @ 0.4% nickel which is equivalent to 101,000 of nickel (“Ni”) metal tonnes.
The Sherlock Bay Extended project is prospective for both precious and base metal mineralisation.
The project will draw on the expertise and skills in magnetite processing from Chinese and other world leaders in this field, providing an excellent opportunity for Australia to benefit from exposure to international skills and processing technology.
The Sino Iron project will be a highly technical, value-adding operation requiring significant processing and transport infrastructure.
The project has access to over two billion tonnes of measured indicated and inferred magnetite ore and, when operational, will be one of the world’s largest mines. It will process produce 27.6 million tonnes per annum of a mix of pellets and concentrate.
The mine’s end product – magnetite, in concentrate and pellets – is an important commodity as it is one of the raw materials used to make steel. In the conversion process, significantly less carbon dioxide is produced than with other materials, making magnetite increasingly desirable in this era of environmental awareness.
Mineralogy Pty Ltd, the owner of the Balmoral magnetite deposit since 1986, investigated various iron ore processing projects based on the Balmoral deposit throughout the 1990’s and early 2000’s before entering into substantial discussions and project due diligence with Chinese steel producers.
These discussions culminated in a milestone agreement struck in March 2006 between Mineralogy and CITIC Pacific Ltd, a major Hong Kong listed company with the PRC government as a major shareholder. In a deal (separate to Australasian Resources) CITIC Pacific acquired the right to mine up to 6 billion tonnes of magnetite iron ore from the George Palmer Deposit (part of the Balmoral deposit). This project, on land adjoining the Australasian Resources Project, is testament to the quality of the deposit as two major Chinese companies have now invested substantial effort and funds to develop these projects.
CITIC Pacific paid Mineralogy Pty Ltd US$215 million for the right to mine an initial 1 billion tonnes. Mineralogy will also receive a royalty of A$0.30 per tonne of magnetite ore taken and 6-10% of the value of production by CITIC Pacific, which is currently in the order of US$100M per annum for 25 years for each 1 billion tonnes purchased.