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Mindax Delivers Highly Positive Scoping Study For Mt Forrest Iron Project

Mindax (ASX: MDX) has delivered solid metrics for its Mt Forrest Iron Project with a newly released Scoping Study.

The study shows that Mt Forrest can support a 1.5 million tonne per annum beneficiated direct shipping ore (DSO) operation for a seven year mine life.

The metrics include an internal rate of return of 32.8% and a net present value (10%) of A$86 million.

Revenue has been estimated at over $1 billion and net cash flow at $204 million.

Processing of Regolith ore would be based on conventional crushing and screening followed by heavy media separation.

Test work suggests a recovery of 84% of iron content. Grades of 58.4% iron are achievable from 45% ores and of 63% iron from 54% ores.

The study assumes the ore will be trucked to Menzies by the public road, loaded and trained to the Port of Esperance via Kalgoorlie.

It is estimated that a DSO Regolith operation could be in production by late 2014.

The Regolith Resource at Mt Forrest is 14.7 million tonnes at 45.4% iron, with 12.3 million tonnes in the higher confidence Indicated category.

The Scoping Study also considered a magnetite option based on concentrate production of 10 million tonnes per annum over an 18 year mine life.

While Mindax envisages both DSO and magnetite projects at Mt Forrest, the company is focused on bringing the DSO stage into production as soon as possible.

The DSO will underpin Mindax's gradual move to magnetite production.

Mt Forrest, a major iron mineralised system within the Yilgarn Iron Province, covers seven mining leases over 50 square kilometres and includes 20 kilometres of banded iron formation strike.

Sumitomo JV

Mindax plans to form a strategic partnership with one of the world's largest worldwide, diversified trading groups - Japan's Sumitomo Corporation - which has total assets of around $100 billion.

Mindax and Sumitomo have signed a heads of agreement, where Sumitomo will have the right to acquire up to a 70% interest in Mt Forrest by way of a farm-in, spending up to AU$115 million in stages.

Importantly, the agreement provides the opportunity to fast track feasibility and development of the direct shipping ore component of the project.

Infrastructure development

Mt Forrest is located 160 kilometres northwest of the town of Menzies in Western Australia, which is on the railway line to the deepwater iron ore port of Esperance.

Importantly, the Western Australian Government is committed to a 20 million tonne per annum expansion to the port.

Leases for transport corridors to the Menzies railhead are in place and negotiations with potential rail, port and other infrastructure partners are well advanced.