Mindax (ASX: MDX) has received the preliminary results of a Yilgarn Iron Producers Association Supply Chain Study which indicates that a low capital and incremental upgrading of infrastructure can be used to cater for the stage one export of DSO material through the Esperance port.
Yilgarn Iron Producers Association members Mindax, Radar Iron (ASX: RAD), Legacy Iron Ore (ASX: LCY), Golden West Resources (ASX: GWR), Mineral Resources (ASX: MIN), Cazaly Resources (ASX: CAZ) and Cliffs Natural Resources (NYSE: CLF) awarded the contract to undertake high level modelling of infrastructure from loading points in the Yilgarn region along rail from Leonora and Koolyanobbing to Esperance and through car dumpers and loaders onto ships at Esperance Port.
The study, which was jointly undertaken by seven Yilgarn iron ore miners and explorers and a reputable engineering firm, is a first in Western Australia to see miners lining up to co-operate closely with each other to facilitate infrastructure upgrades.
The details of the study have been shared with Esperance Ports Sea and Land (EPSL). YIPA members are individually involved in EPSL's current market sounding process for a new multi-user iron ore facility.
A representative of YIPA commented: "Learning the lessons of Oakajee, a modestly priced Esperance Port upgrade (stage one) of 10 to 15 million tonnes per annum capacity is the way forward along with incremental rail upgrades.
"A stage two upgrade, with the construction of a second berth, could boost the total port potential above 50 million tonnes per annum and this could be reached over time through a number of environmentally sound sequential expansions."
Cliffs already exports around 11 million tonnes per annum through Esperance and Mineral Resources is building up to 4 million tonnes per annum through Kwinana, with more proposed for Esperance.
Discussions with infrastructure providers are continuing and further modelling and detailed analysis is expected to be undertaken.
Mindax's Mt Forrest
Mindax has been focusing on fast-tracking the direct shipping ore stage of the Mt Forrest Iron Project, which will underpin the future development of the high quality magnetite resource.
Mt Forrest, which hosts an Indicated and Inferred JORC magnetite resource of 1.7 billion tonnes at 31.8% iron, will be developed initially as a modest beneficiated DSO operation of 1.5 million tonnes per annum, with potential for first ore to be shipped in 2014.
A Scoping Study completed earlier this year has shown solid metrics including an internal rate of return of 32.8% and a net present value (10%) of A$86 million.
Revenue for a DSO operation has been estimated at over $1 billion and net cash flow at $204 million.
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