THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES
Macarthur Minerals Limited (TSX:MMS)(OTCQX:MMSDF) ("the Company" or "Macarthur")
is pleased to announce the receipt of the Ularring Hematite Project Preliminary
Economic Assessment ("PEA") undertaken by Engenium Pty Ltd ("Engenium") in
respect of the hematite deposits located within the Company's tenements in the
Yilgarn region of Western Australia. The Snark, Drabble Downs, Central and
Banjo/Lost World hematite deposits comprise the newly named Ularring Hematite
Project ("Project").
The September 21, 2011 news release reported that the Mineral Resource estimate
was in support of a Preliminary Feasibility Study ("PFS"). Although some of the
analysis in the PEA has been carried out at a PFS level there was insufficient
resource definition to support a PFS level study, compounded by the fact that
preliminary metallurgical test work returned encouraging results which warrant
further investigation. Rather than delay the PFS the Company has decided to
release preliminary analysis as a PEA in accordance with the original PFS
proposed timeline.
An updated National Instrument ("NI") 43-101 Technical Report, which includes
the results of the NI 43-101 dated November 4, 2011 Hematite Mineral Resource,
will be filed on SEDAR within 45 days of this news release.
PEA Highlights
-- Project pre-tax NPV of AUD 227 million, at 10% real discount rate, and
AUD 248 million at 8%, based on a discounted cash flow model with:
-- a project life of 5 years; and
-- no terminal value added to the NPV, which assumes no extension to
the plant and/or mine life.
-- The Project is potentially highly profitable with payback (based on NPV)
in 3 years.
-- Operating costs estimated at AUD 67/t (rounded)
-- Total direct costs estimated at AUD 94 million (rounded)
-- Total Project costs (direct & indirect, including contingency of AUD 23
million) are estimated at AUD 134 million (rounded)
Resource Base
The PEA utilises the combined mineral resources of Snark, Drabble Downs,
Central, Banjo and Lost World deposits, being indicated resources of 8.6 million
tonnes ("Mt") at 54.9% Fe and inferred resources of 15.8 Mt at 55.3% Fe as
detailed in Table 1 (press release dated September 21, 2011), above a 50% Fe
cut-off. The inferred hematite resource of 600,000 tonnes at the Moonshine
deposit has been excluded from the PEA.
Table 1 - Hematite (Potential DSO) -Mineral Resource Estimate
---------------------------------------------------------------------------
Category Deposit Tonnes Fe % P % SiO2% Al2O3% S% LOI %
---------------------------------------------------------------------------
Indicated Snark 7,320,000 55.1 0.07 8.4 4.4 0.15 7.7
-----------------------------------------------------------------
Drabble Downs 1,310,000 53.5 0.06 8.1 5.4 0.36 9.0
-----------------------------------------------------------------
Total 8,630,000 54.8 0.07 8.3 4.6 0.19 7.9
---------------------------------------------------------------------------
Inferred Snark 4,110,000 55.1 0.07 8.7 4.2 0.12 7.6
-----------------------------------------------------------------
Drabble Downs 1,380,000 55.9 0.06 5.9 4.6 0.36 8.7
-----------------------------------------------------------------
Banjo -
Lost World 5,500,000 55.7 0.07 8.1 4.7 0.15 7.1
-----------------------------------------------------------------
Central 4,800,000 55.2 0.06 8.2 4.5 0.14 8.0
-----------------------------------------------------------------
Total 15,800,000 55.4 0.07 8.1 4.5 0.16 7.6
---------------------------------------------------------------------------
Notes:
-- Figures contained within Table 1 have been rounded.
-- Block models were constructed using three dimensional geological
wireframes.
-- Densities for Snark and Drabble Downs were 2.9t/m3 for all mineralised
zones. Densities for Central, Banjo and Lost World were based upon an
algorithm whereby the density for a block in the resource model was
calculated from the estimated Fe% grade.
-- The CSA Global Pty Ltd Mineral Resources were estimated using
constraining wire framed solids based on a lower limit cut-off grade of
50% Fe. The resource was quoted from blocks above 50%.
-- Table 1 excludes the Moonshine hematite inferred resources of 600,000
tonnes.
Financial Highlights and Project Life
The financial highlights for the PEA are summarised as follows:
Table 2 - Financial Highlights
-----------------------------------------------------------------
PEA financial model 7 Years
PEA estimate accuracy +/- 30% to 35%
Saleable product per annum 2Mtpa
Operating cost (FOB) A$67.3/t
Capital direct cost A$93.5 M
Pre-tax NPV at 8% real discount rate A$248 M
Pre-tax NPV at 10% real discount rate A$227 M
IRR 62%
-----------------------------------------------------------------
PEA Participants
Areas of responsibility in the preparation of this study:
-- Engenium Pty Ltd covered all areas of study management, metallurgy,
processing, port and logistics, infrastructure, marketing, estimates,
financial analysis, risk and forward work.
-- Runge Ltd covered mining.
-- CSA Global Pty Ltd covered geology and Mineral Resource estimates.
-- Strategen Environmental Consultants Pty Ltd covered environmental
impacts and management, project approvals and land access and native
title.
Macarthur Minerals Strategy
To date Macarthur has delineated indicated hematite resource, at a 50% cut off,
of 8.6 Mt at 54.8% Fe and inferred hematite resources of 15.8 Mt at 55.4% Fe,
exclusive of the Moonshine inferred hematite resource of 600,000 tonnes (press
release dated September 21, 2011), and an inferred mineral resource of 1.3
billion tonnes ("Bt") at 30.1% Fe (press release dated December 15, 2010) of
magnetite mineralisation at a 15% cut off (the Macarthur Magnetite Project).
The PEA reveals the importance of the availability and access to port capacity
to support development of the Ularring Hematite Project.
The Company's strategy is to advance the development of the Project for export
of hematite product by late 2013/early 2014. The hematite export program will
act as the foundation for the expansion and advancement of the Macarthur
Magnetite Project, to follow. The location of the Project in proximity to rail
and port infrastructure as well as access to contract mining services and access
to human resources assists in supporting the commerciality of the Project.
Mining and Processing
Mining of the Ularring Hematite Project would be conducted by conventional
drill, blast, load and haul mining methods. Potential ore would then be hauled
to the Run of Mine ("ROM") pad for crushing and screening. Drilling and blasting
bench heights would be optimised to suit the drill rig and single pass drilling.
Anticipated minable pit tonnages are:
Table 3 - Minable Tonnages and Grades
----------------------------------------------------------------------
Mineable Calcined Strip
Quantity Grade Grade Waste Ratio
Area (Mt) (% Fe) (% CaFe) (Mt) (t:t)
----------------------------------------------------------------------
Snark 5.8 55.9 60.5 16.7 2.9:1
----------------------------------------------------------------------
Banjo 2.6 56.1 60.3 6.0 2.3:1
----------------------------------------------------------------------
Central 2.1 55.7 60.6 7.1 3.4:1
----------------------------------------------------------------------
Total 10.5 55.9 60.5 29.8 2.8:1
----------------------------------------------------------------------
At mine operation commencement, production rates, nominally 2 Mtpa of fines
product, would be achieved utilising contracted mining and an owner operated
mobile crushing and screening plant to feed the potential Direct Shipping Ore
("DSO") road train loading bin, with provision for emergency load out via a
mobile stacker to an emergency product stockpile.
The key components including the crushers and screens would typically be skid,
track or trailer mounted to allow haulage to site via low loaders for setting
onto prepared concrete footings, where required, and to allow moving the plant
to a secondary site as the mining operation develops.
Port and Logistics
The selected haul road route utilises the existing Evanston Menzies Rd to
Menzies, bypassing the township of Menzies using the existing Intermin Resources
haul road, and then travels south on the Goldfields Highway to the proposed rail
siding. The overall length of the haulage road from Snark Mining Operations
Centre ("MOC") to the rail siding is 121.1 km and from Central MOC to the rail
siding is 136.6 km. The road haulage route would be suitable for up to 120t
payload road trains.
The proposed rail siding is located approximately 8.5 km south of Menzies. The
haul distance between the rail siding and the Port of Esperance ("Port") is 510
km.
The preferred port for the Ularring Hematite Project is the Port of Esperance.
It is an existing port, and currently exports 9 Mtpa of iron ore. The Port of
Esperance is the deepest port in southern Western Australia, capable of handling
Cape Class vessels up to 200,000 tonnes and fully loaded Panamax class vessels
up to 75,000 tonnes.
On December 16, 2010 the Company announced that it entered a Multi User Iron Ore
Facility Access Deed with Esperance Port Authority under which it had a secured
commitment to a 2 Mtpa allocation as part of the proposed expansion of the Port
to provide a Multi User Iron Ore Facility. The Company has aligned its proposed
mining commencement date with the Port's capacity expansion potentially due for
completion in late 2013/early 2014, subject to development.
On August 4, 2011 the Company announced that the Esperance Port's expansion was
approved in principle by the Western Australian Minister for Transport. The
Western Australian Department of Transport has engaged Deloitte to undertake a
Multi User Iron Ore Facility Demand Survey in relation to future port capacity
requirements for both Esperance Port Authority and Fremantle Port Authority.
Recent representations from emerging Yilgarn iron ore companies to the Western
Australia Department of Transport indicate that larger port capacity is required
to support this emerging iron ore region.
The Company has participated in this Demand Survey and will use its "foundation
customer" status to cooperate with the nominated developer.
Metallurgy
The PEA is based solely on using the grade tonnage curve to determine
commercially saleable potential DSO material. During the course of the
preparation of the study, the Company commissioned beneficiation test work on a
single representative sample of Snark potential DSO material, to gauge the
potential impact of beneficiation on product grade, the reduction of deleterious
materials and the efficient utilisation of the Project's hematite
mineralisation.
Whilst these results are preliminary and therefore not factored into the PEA,
the beneficiation test work did demonstrate that conventional gravity
beneficiation using simple jig and spirals processes, and possible magnetic
separation, could result in the production of high grade iron products. In this
initial testing the Company used a sample grading 56.6% Fe hematite,with the
test work demonstrating that a relatively straight forward gravity separation
process could upgrade the Fe content by 3.1% absolute (5.4% relative
improvement), resulting in an un-optimised mass yield of 63.3% Fe.
It is believed that beneficiation would provide a more robust operation with a
more efficient use of the resource inventory. The initial test work demonstrated
that good grade consistency along with an appreciable reduction in impurities
could be achieved.
The PEA indicates that a majority of the operating cost is attributable to
transport:thus beneficiation of the ore to higher grade products should have a
positive impact on FOB price and a positive impact on reducing the effective
transport cost for a unit of Fe by reducing the contribution to cost of
transporting waste material in the potential DSO sale product.
The beneficiation test results warrant detailed evaluation before any final
decision as to the preferred approach for the exploitation of the identified
mineral resource is decided. The impact of beneficiation will be reported in
future study program releases.
Approvals
The environmental approvals process is a critical path for the project.
Environmental baseline studies are well under way with many of the seasonal
surveys due for completion by the end of 2011. Referral of the Project to the
Environmental Protection Authority ("EPA") is planned for Q2 2012 and submission
of the Mining Proposal to the Department of Mines and Petroleum ("DMP") is
planned for Q4 2012.
Initial surveys undertaken by the Company have not discovered any declared rare
flora species or threatened ecological communities within the proposed
disturbance areas. Only one fauna species of interest has been identified within
the proposed disturbance area, Malleefowl (Leipoaocellata), however the Project
is not considered to significantly impact this species. Ongoing surveys are
planned throughout 2012 to continue the collection of environmental data so the
Company can develop a greater understanding of the potential environmental
impacts of the Project.
Furthermore, there are currently no registered native title claims over the
Project or any of the granted mining leases.
Summary
The technical and financial evaluation in the PEA has concluded that further
project development is justified based on information currently available. The
Company cautions that the PEA is preliminary in nature, and it includes
Indicated and Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them that would
enable them to be categorised as Mineral Reserves. Mineral Resources that are
not Mineral Reserves do not have demonstrated economic viability. Accordingly,
there can be no certainty that the results estimated in the PEA will be
realised.
The following key activities were recommended to be undertaken throughout the
next stage of the Ularring Hematite Project:
-- further drilling and geological studies to improve the Mineral Resource
estimate;
-- establishing sources of water for production and dust suppression
purposes;
-- further investigation into beneficiation potential;
-- development of mine and infrastructure design; and
-- refinement of capital and operating cost estimates (+/- 20-25%).
Quality Assurance and Quality Control (QA/QC)
Intersections reported have been verified by the Company's QA/QC protocols. All
samples from the drill holes are prepared by Ultra Trace and Amdel Laboratories
and pulverised to 90% passing 75 microns then analysed for the iron suite using
XRF.
QUALIFIED PERSONS
Mr David Williams, BSc (Hons), a member of the Australian Institute of
Geoscientists, who is a full-time employee of CSA Global Pty Ltd and is an
Independent Qualified Person, has reviewed and approved the above technical
information relating to Mineral Resource estimates contained in this release, in
the form and context in which it appears.
Mr Neville Dowson B App Sc (Extractive Metallurgy), a fellow of AusIMM, who is a
full-time employee of Engenium Pty Ltd and is an Independent Qualified Person,
has reviewed and approved the above technical information relating to
metallurgical analysis and assessment of the project.
Mr Alan Dickson, BSc (Eng), a fellow of AusIMM, who is a full-time employee of
Alan Dickson & Associates Pty Ltd and is an Independent Qualified Person, has
reviewed and approved the above technical information relating to the mining,
technical and financial review of the PEA.
Further information on Macarthur Minerals Limited and technical reports on the
Ularring hematite project can be found on the company's website
www.macarthurminerals.com or www.sedar.com.
ABOUT ENGENIUM PROPRIETARY LIMITED
Engenium is a Project Delivery company servicing the resource and infrastructure
sectors of Australia. Engenium's service offering includes all aspects of
project development from early metallurgical testwork programs,
scoping/feasibility studies, engineering design and construction management.
Founded in 2003, Engenium assisted numerous junior, mid-tier and major companies
in the Australian mining sector with the development of their iron ore projects.
Clients include Atlas Iron, BC Iron, BHPBilliton, Brockman Resources, Cazaly
Mining, Golden West Resources, Polaris Metals, Reed Resources, Rio Tinto,
Sherwin Iron and Warwick Resources. Over the past 8 years Engenium has built up
a significant database of knowledge with resource projects, and in particular
hematite and magnetite operations. For further information regarding Engenium,
please view the company website www.engenium.com.au.
ABOUT RUNGE LIMITED
Runge is a leader in the provision of technology products, consulting services
and training courses to the global mining industry, delivering solutions and
services across a range of commodities. With expertise across a range of mining
disciplines, Runge's approach to the business of mining is strongly grounded in
economic principles and delivering mine planning solutions that are tightly
coupled with technological support and training. Runge currently operates 20
offices in 12 countries throughout the world. Companies operating under the
Runge name include Pincock Allen & Holt, Minarco-MineConsult, MRM Mining
Services Pty Ltd, GeoGAS Pty Ltd and Correlate Capital Pty Ltd. For further
information regarding Runge Ltd, please view the company website www.runge.com.
ABOUT CSA GLOBAL PROPRIETARY LIMITED
CSA Global Pty Ltd is a leading geological, mining and management consulting
company whose staff include geologists, mining engineers, project managers, data
management professionals and technical personnel. CSA has been operating from
Perth, Western Australia since 1986. They are an independent company, with
origins dating back to 1984 as part of CSA Group founded in Ireland. CSA now has
offices in the UK, Indonesia, Darwin and Brisbane. CSA Global has a high level
of technical expertise in most mineral commodities gained from over twenty
years' experience within the exploration and mining industry at an international
level. They have experience in all stages of the mining cycle from project
generation to production. For further information regarding CSA Global, please
refer to the company website at www.csaglobal.com.
ABOUT MACARTHUR MINERALS LIMITED (TSX:MMS)(OTCQX:MMSDF)
Macarthur Minerals Limited is an Australian based resource development company
currently focussed on developing its Ularring Hematite Project, located in the
Yilgarn iron ore district in Western Australia. The Ularring Hematite Project is
located 110 km from rail with direct access to the Port of Esperance, Western
Australia.
The Ularring Hematite Project has an indicated hematite resource of 8.6 Mt at
54.9% Fe and an inferred resource of 15.8 Mt at 55.3% Fe (press release dated
September 21, 2011), and the Macarthur Magnetite Project has an inferred
resource of 1.3 billion tonnes ("Bt") at 30.1% Fe (press release dated December
15, 2010) that has been reported in accordance with National Instrument 43-101.
On behalf of the Board of Directors,
MACARTHUR MINERALS LIMITED
Alan Phillips, President, Chairman & CEO
Caution Regarding Forward Looking Statements
Certain of the statements made and information contained in this press release
may constitute forward-looking information and forward-looking statements
(collectively, "forward-looking statements") within the meaning of applicable
securities laws. The forward-looking statements in this press release reflect
the current expectations, assumptions or beliefs of the Company based upon
information currently available to the Company. With respect to forward-looking
statements contained in this press release, assumptions have been made
regarding, among other things, the reliability of information prepared and/or
published by third parties that are referenced in this press release or was
otherwise relied upon by the Company in preparing this press release. Although
the Company believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not
guarantees of future performance and no assurance can be given that these
expectations will prove to be correct as actual results or developments may
differ materially from those projected in the forward-looking statements.
Factors that could cause actual results to differ materially from those in
forward-looking statements include unforeseen technology changes that results in
a reduction in iron or magnetite demand or substitution by other metals or
materials, the discovery of new large low cost deposits of iron magnetite and
the general level of global economic activity. Readers are cautioned not to
place undue reliance on forward-looking statements due to the inherent
uncertainty thereof. Such statements relate to future events and expectations
and, as such, involve known and unknown risks and uncertainties. The
forward-looking statements contained in this press release are made as of the
date of this press release and except as may otherwise be required pursuant to
applicable laws, the Company does not assume any obligation to update or revise
these forward-looking statements, whether as a result of new information, future
events or otherwise.
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