Head Office:
ASX ANNOUNCEMENT
7 April 2008
Project
Update
Weld Range Project Feasibility Study
Midwest Corporation Limited (Midwest)
(ASX:MIS) announces that the timing for completion of the Pre-Feasibility Study
(PFS) for the development of the Weld Range Project has been extended to
December 2008.
This follows advice from the Sinosteel / Midwest Joint
Venture team that delays have occurred in the drilling programme supporting the
PFS, which was previously scheduled for completion by September 2008.
These delays are primarily the result of external factors,
including wet weather and challenging drilling conditions. Rain from cyclones
in the Pilbara region has caused local flooding forcing road closures, and limiting
rig access. Difficult ground conditions involving significant in situ water
have been encountered. In addition, the drilling teams have experienced lower
than expected drill penetration rates in hard rock drilling through jaspilite,
which is expected to continue for another four weeks.
Midwest CEO Bryan Oliver said the two and a half month extension
of the PFS is not expected to impact on the project completion schedule of
second half of 2011, which is driven by the completion of the new port and rail
infrastructure development.
Mr Oliver said “Midwest currently has seven rigs drilling
at Weld Range and plan to mobilise four more
rigs within the next two weeks to accelerate the drilling programme.”
“The Sinosteel / Midwest
Joint Venture is well advanced in its exploration program and in January announced
a 19 million tonne (mt) resource upgrade,” Mr Oliver said.
“Our drilling campaign has been impacted by adverse weather
and harder drilling conditions, but a ramp-up from seven to 11 rigs on site
during the next two weeks will help offset the impact of the delays. The PFS
drilling is now expected to be completed by mid May, with the PFS due in
December 2008. Timing for the completion of the Bankable Feasibility Study
(BFS) is being reviewed, with the results of this review expected to be available
by end of April 2008.
“As the port and rail infrastructure are on the
critical path, there are no delays expected for the commencement of hematite mining
at Weld Range as a result of the slower than
expected drilling program,” Mr Oliver said.
The Company’s drilling program at Weld Range
includes:
- Seven drill rigs (three RC and
four diamond core) on site in the Madoonga and Beebyn deposits carrying
out infill and closure drilling, as well as geotechnical drilling for mine
pit design.
- A further four drill rigs (one
RC and three diamond core), making a total of 11 rigs (four RC and seven diamond core), are being
mobilised over the next two weeks.
- Approximately 100 exploration
personnel are expected to be on site by mid April.
Midwest’s flagship Weld Range Direct Shipping Ore Project
is located 65 km southwest of Meekatharra in the mid west of Western Australia. It is one of five iron
ore projects within Midwest’s portfolio
of assets.
The Weld Range Project has 133.4Mt of hematite Mineral
Resource (JORC) at 58.5% Fe at a cut off grade of 50% Fe, with grades as high
as 66.9% Fe having been recorded. The areas covered by the Mineral Resource
estimate have no noteworthy deleterious contaminant elements and have
acceptable strip ratios (waste : ore).
The Weld Range Project has significant potential due to the high
grade outcrops over a 16 km strike length. The current Mineral Resource
represents only 6 km of the strike length.
The Weld Range Project Scoping Study was completed on
schedule in March 2007. The Study assessed in detail the resource definition,
mining and processing, infrastructure, product classification and marketing for
the project. The study confirmed the project potential based on a minimum scale
of 15mt per annum for 15 years.
The Sinosteel / Midwest Joint Venture Agreement (JVA) covers
the Weld Range hematite project and the
Koolanooka magnetite projects. The JVA allows for joint implementation of
exploration, feasibility studies and an off-take agreement.
The JVA is a long term agreement, which has been in place
since 2005, and became unconditional in January 2006 with the granting of
approvals for the joint venture from the Chinese Government and the Foreign
Investment Review Board.
Completion of the PFS will form the basis for the intrinsic
value buy-in negotiations between Midwest and Sinosteel whereby Sinosteel has
an option to acquire up to 50% of the project and form an operating joint
venture with Midwest, in return for paying an
acceptable value for the asset.
ENDS
Media
contacts:
|
Cannings
(02) 9252 0622
Martin Debelle 0409 911 189
|
Purple
Communications (08) 9485 1254
Warrick
Hazeldine 0417 944 616
|
Current Position of Midwest
projects
Koolanooka/Blue Hills Direct Shipping Ore (DSO) Project
has a remaining ore reserve of 7.9mt at 57.8% Fe and is producing
from existing stockpiles with a 1mt per annum installed capacity. Midwest has
100% of current production on secure contracts exporting to China. Production and shipment of
iron ore fines from the stockpile at Koolanooka continued at a steady level
throughout 2007. Stockpiles at Koolanooka will be exhausted by mid 2008 and Midwest is seeking to ensure continuity of supply by selective
mining applications for relatively low environmental impact portions of the
hard rock mining project which are expected to incur shorter environmental and
mining approval processes.
The Weld
Range DSO Project is Midwest’s flagship DSO project, with a Mineral
Resource of 133.4Mt at 58.5% Fe, 50Mt of which is in the measured category. Midwest is continuing its extensive drilling campaign,
with 453 holes for 55,473m drilled to the end of the first quarter 2008. Midwest currently has 7 rigs onsite. A Pre-Feasibility Study
is currently underway with Worley Parsons as lead engineering consultant, and
is scheduled for completion in December 2008. Initial sinter test programmes
for value in use assessments on prepared representative lump and fine ore
samples from Madoonga and Beebyn were completed with the China Iron and Steel
Research Institute. The results from this test programme were very positive.
Hampton Hill Mining NL Joint Venture agreement
provides Midwest with the sole and exclusive right to enter into a joint
venture to explore, develop and mine iron ore deposits within Hampton's
Weld Range
tenements, which are located near to Midwest’s current project areas at Weld Range.
Koolanooka Magnetite Project forms the
second stage in the development of the Koolanooka resource. This project is
included in the Sinosteel / Midwest Studies Joint Venture. The Koolanooka
magnetite project has a significant magnetite Mineral Resource of 430Mt at 35%
Fe. The Scoping Study completed in February 2006 examined production rates of
up to 6 mt per annum, pipeline, rail and road transport options and pellet plant
locations at Koolanooka, Narngulu and Oakajee. A study programme involving
further drilling and optimising of the concentration process will be carried
out by the Sinosteel / Midwest Studies Joint Venture.
Jack Hills DSO Project is part of
an ongoing exploration programme to delineate high-grade iron ore reserves at Jack Hills
which will provide incremental expansion capacity after implementation of the
Weld Range Project. Jack
Hills has announced a
Mineral Resource of 15.4Mt at 59.7% Fe. Midwest’s
drilling campaign continues with 188 holes for 12,235m drilled to the end of
2007.
Robinson Range Project includes
initial low level exploration activities with field mapping to identify drill
targets and an initial drilling campaign is planned for 2008. Field mapping and
rock chip sampling indicated 59.2% to 63.4% Fe over significant outcropping
strike lengths of hematite.
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